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As filed with the Securities and Exchange Commission on May 24, 1994
REGISTRATION NO. 33-53157
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
____________________
TELE-COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Delaware 4841 84-0588868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Primary Standard Industrial Classification Code Number) Identification No.)
</TABLE>
5619 DTC Parkway
Englewood, Colorado 80111-3000
(303) 267-5500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
____________________
Stephen M. Brett, Esq.
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
(303) 267-5500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
____________________
Copy to:
Elizabeth M. Markowski, Esq.
Baker & Botts, L.L.P.
885 Third Avenue
New York, New York 10022-4834
(212) 705-5000
____________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this registration statement becomes
effective.
If any of the securities being registered on this Form are being
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box: / /
____________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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TELE-COMMUNICATIONS, INC.,
Cross Reference Sheet Between Items in Form S-4 and Prospectus
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Item No. Form S-4 Caption Heading in Prospectus
-------- ---------------- ---------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
Item 1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . Outside Front Cover Page
Item 2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . . . Inside Front Cover Page; Available Information;
Incorporation of Certain Documents by Reference
Item 3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information . . . . . . . . Summary; Certain Considerations; The Company
Item 4. Terms of the Transaction . . . . . . . . . . . The Exchange Offer; Certain Federal Income Tax
Considerations; Description of New Notes; Comparison of
Existing Notes and New Notes
Item 5. Pro Forma Financial Information . . . . . . . . Incorporation of Certain Documents by Reference
Item 6. Material Contacts with the Company Being
Acquired . . . . . . . . . . . . . . . . . . . *
Item 7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . . . . . . . . *
Item 8. Interests of Named Experts and Counsel . . . . Legal Matters; Experts
Item 9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . . . . . *
B. INFORMATION ABOUT THE REGISTRANT
Item 10. Information with Respect to S-3
Registrants . . . . . . . . . . . . . . . . . . Recent Developments
Item 11. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
Item 12. Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . . . *
Item 13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . *
Item 14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants . . . . . . . *
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
Item 15. Information with Respect to S-3
Companies . . . . . . . . . . . . . . . . . . . *
Item 16. Information with Respect to S-3 or S-2
Companies . . . . . . . . . . . . . . . . . . . *
Item 17. Information with Respect to Companies
Other than S-3 or S-2 Companies . . . . . . . . *
D. VOTING AND MANAGEMENT INFORMATION
Item 18. Information if Proxies, Consents or
Authorizations are to be Solicited . . . . . . *
Item 19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer . . . . . . . . . . . . . *
</TABLE>
__________________
* Omitted because inapplicable or answer is in the negative.
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INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS SUBJECT
TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS
TO BUY BE ACCEPTED PRIOR TO THE TIME A FINAL PROSPECTUS SUPPLEMENT IS
DELIVERED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, dated May 24, 1994
PROSPECTUS
TELE-COMMUNICATIONS, INC.
OFFER TO EXCHANGE ITS 9.55% SENIOR NOTES, SERIES A, DUE DECEMBER 15, 2001,
8.67% SENIOR NOTES, SERIES B, DUE AUGUST 31, 2002, 8.85%
SENIOR NOTES, SERIES C, DUE AUGUST 31, 2002, 9.82% SENIOR NOTES, SERIES D, DUE
SEPTEMBER 30, 1997 AND 10.25% SENIOR NOTES, SERIES E,
DUE SEPTEMBER 30, 2000 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 FOR ANY AND ALL OF ITS OUTSTANDING 9.55% SENIOR
NOTES, SERIES A, DUE DECEMBER 15, 2001, 8.67% SENIOR NOTES, SERIES B, DUE
AUGUST 31, 2002, 8.85%, SENIOR NOTES, SERIES C, DUE
AUGUST 31, 2002, 9.82% SENIOR NOTES, SERIES D, DUE SEPTEMBER 30, 1997 AND
10.25% SENIOR NOTES, SERIES E, DUE SEPTEMBER 30, 2000
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 P.M., NEW YORK CITY TIME,
ON , 1994, UNLESS EXTENDED
Tele-Communications, Inc., a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the related Letter of Transmittal (the "Letter of Transmittal")
(which together constitute the "Exchange Offer"), to exchange up to $5,000,000
aggregate principal amount of 9.55% Senior Notes, Series A, due December 15,
2001 ("New Series A Notes"), up to $26,500,000 aggregate principal amount of
8.67% Senior Notes, Series B, due August 31, 2002 ("New Series B Notes"), up to
$36,000,000 aggregate principal amount of 8.85% Senior Notes, Series C, due
August 31, 2002 ("New Series C Notes"), up to $32,000,000 aggregate principal
amount of 9.82% Senior Notes, Series D, due September 30, 1997 ("New Series D
Notes") and up to $20,000,000 aggregate principal amount of 10.25% Senior
Notes, Series E, due September 30, 2000 ("New Series E Notes", and together
with the New Series A Notes, the New Series B Notes, the New Series C Notes and
the New Series D Notes, the "New Notes") of the Company for a like principal
amount of the Company's issued and outstanding 9.55% Senior Notes, Series A,
due December 15, 2001 ("Existing Series A Notes"), 8.67% Senior Notes, Series
B, due August 31, 2002 ("Existing Series B Notes"), 8.85% Senior Notes, Series
C, due August 31, 2002 ("Existing Series C Notes"), 9.82% Senior Notes, Series
D, due September 30, 1997 ("Existing Series D Notes") and 10.25% Senior Notes,
Series E, due September 30, 2000 ("Existing Series E Notes", and together with
the Existing Series A Notes, the Existing Series B Notes, the Existing Series C
Notes and the Existing Series D Notes, the "Existing Notes"), respectively,
with the holders thereof. The terms of each series of New Notes are
substantially identical to the terms of the corresponding series of the
Existing Notes to be exchanged therefor, except as described herein. See
"Description of the New Notes" and "Comparison of Existing Notes and New
Notes".
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________
The date of this Prospectus is , 1994.
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(Continued from previous page)
The Existing Notes were issued pursuant to a Note Exchange Agreement,
dated as of July 1, 1993, as amended, between the Company and certain
institutional investors (the "Note Exchange Agreement"), in a transaction not
registered under the Securities Act of 1933 (the "Securities Act"), in reliance
upon the exemption provided in Section 4(2) of the Securities Act.
Accordingly, the Existing Notes may not be reoffered, resold or otherwise
pledged, hypothecated or transferred in the United States unless so registered
or unless an applicable exemption from the registration requirements of the
Securities Act is available. The New Notes issued pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act
provided that such New Notes are acquired in the ordinary course of such
holder's business and such holder is not participating, and has no arrangement
with any person to participate, in the distribution of such New Notes. By
tendering Existing Notes and executing the Letter of Transmittal, the holder
thereof is representing to the Company that such conditions have been met. The
Company has not entered into any arrangement or understanding with any person
to distribute the New Notes and to the best of the Company's information and
belief, each person participating in the Exchange Offer is acquiring the New
Notes in the ordinary course of its business and has no arrangement or
understanding with any person to participate in the distribution of the New
Notes to be received in the Exchange Offer.
UNDER NO CIRCUMSTANCES MAY THIS PROSPECTUS BE USED FOR AN OFFER TO
RESELL, RESALE OR OTHER RETRANSFER OF NEW NOTES.
Holders of Existing Notes whose Existing Notes are not tendered and
accepted in the Exchange Offer will continue to hold such Existing Notes and
will be entitled to all the rights and preferences and will be subject to the
limitations applicable thereto under the Note Exchange Agreement, except for
any such rights or limitations which, by their terms, terminate or cease to be
effective as a result of the Exchange Offer. See "Comparison of Existing Notes
and New Notes -- Payment Provisions -- Repurchases". Such Existing Notes will
not be entitled to the benefits of the provisions of the Note Exchange
Agreement relating to the contingent increase in the interest rate applicable
to the Existing Notes if the Exchange Offer is not consummated by a specified
date and no Contingent Interest (as defined herein) will accrue or be payable
with respect to such Existing Notes. Following consummation of the Exchange
Offer, the holders of Existing Notes will continue to be subject to the
existing restrictions upon transfer thereof and the Company will have no
obligation to such holders to provide for registration under the Securities Act
of the Existing Notes held by them or to make an exchange offer of registered
securities for such Existing Notes. See "Certain Considerations --
Restrictions on Transfer; Consequences of Failure to Exchange" and "The
Exchange Offer -- Purpose of the Exchange Offer; Contingent Interest".
________________________
The Company will accept for exchange any and all Existing Notes that
are validly tendered on or prior to 12:00 p.m., New York City time, on the
date the Exchange Offer expires, which will be ____________, 1994, unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of Existing Notes
may be withdrawn at any time prior to the Expiration Date. The Exchange Offer
is not conditioned upon any minimum principal amount of Existing Notes being
tendered for exchange, but is subject to certain conditions which may be waived
by the Company. Existing Notes may be tendered, and New Notes will be issued,
only in denominations of $100,000 and integral multiples thereof. Any Existing
Notes not accepted for exchange for any reason will be returned without expense
to the tendering holders thereof as promptly as practicable after the
expiration or termination of the Exchange Offer. The Company will pay all the
expenses incurred by it incident to the Exchange Offer. See "The Exchange
Offer".
(Continued on next page)
2
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(Continued from previous page)
Holders whose Existing Notes are tendered and accepted for exchange
will not receive accrued interest (other than Contingent Interest) thereon on
the date of exchange. Instead, interest (other than Contingent Interest)
accruing from June 15, 1994 through the Expiration Date on Existing Series
A Notes accepted for exchange will be payable on the New Series A Notes issued
in exchange therefor on December 15, 1994, interest (other than Contingent
Interest) accruing from January 31, 1994 through the Expiration Date on
Existing Series B Notes and Existing Series C Notes accepted for exchange will
be payable on the New Series B Notes and the New Series C Notes, respectively,
issued in exchange therefor on July 31, 1994, and interest (other than
Contingent Interest) accruing from March 30, 1994 through the Expiration Date
on Existing Series D Notes and Existing Series E Notes accepted for exchange
will be payable on the New Series D Notes and the New Series E Notes,
respectively, issued in exchange therefor on September 30, 1994. The amount of
Contingent Interest that has accrued on Existing Notes accepted for exchange
will be payable to the tendering holders on the Issue Date (as defined herein)
of the New Notes issued in exchange thereof. See "The Exchange Offer --
Acceptance of Tenders" and "Description of the New Notes -- Interest".
No assurance can be given that an active public or private market for
the New Notes will develop. The Company does not intend to list the New Notes
on a national securities exchange or to apply for quotation of the New Notes on
The Nasdaq Stock Market. To the extent the Existing Notes are tendered and
accepted in the Exchange Offer, the trading market, if any exists or develops,
for untendered and tendered but unaccepted Existing Notes could be adversely
affected.
THE COMPANY HAS NO SIGNIFICANT AMOUNT OF INDEBTEDNESS OUTSTANDING TO WHICH
THE EXISTING NOTES ARE, OR THE NEW NOTES WILL BE, SENIOR IN RIGHT OF PAYMENT
AND DOES NOT HAVE ANY CURRENT FIRM ARRANGEMENTS TO ISSUE ANY SIGNIFICANT
INDEBTEDNESS TO WHICH THE EXISTING NOTES OR NEW NOTES WOULD BE SENIOR IN RIGHT
OF PAYMENT. SEE "SUMMARY -- THE NEW NOTES -- RANKING." A SUBSTANTIAL PORTION
OF THE CONSOLIDATED LIABILITIES OF THE COMPANY HAVE BEEN INCURRED BY ITS
SUBSIDIARIES AND THE RIGHTS OF THE HOLDERS OF EXISTING NOTES AND NEW NOTES TO
PARTICIPATE IN THE DISTRIBUTION OF ANY ASSETS OF ANY SUBSIDIARY UPON ITS
LIQUIDATION OR REORGANIZATION WILL BE EFFECTIVELY SUBORDINATE TO THE RIGHTS OF
THE CREDITORS OF SUCH SUBSIDIARY. AT MARCH 31, 1994, THE AGGREGATE AMOUNT OF
THE OUTSTANDING DEBT OF THE COMPANY'S CONSOLIDATED SUBSIDIARIES WAS
APPROXIMATELY $4.91 BILLION (INCLUDING GUARANTIES OF INDEBTEDNESS OF OTHERS AND
THE UNACCRETED PORTION OF INDEBTEDNESS ISSUED AT A DISCOUNT, BUT EXCLUDING
INDEBTEDNESS OWED TO THE COMPANY). AT THAT DATE, THE COMPANY'S CONSOLIDATED
SUBSIDIARIES HAD AN AGGREGATE OF APPROXIMATELY $1.374 BILLION IN UNDRAWN LINES
OF CREDIT. SEE "DESCRIPTION OF NEW NOTES -- GENERAL."
3
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AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on
Form S-4 (together with all amendments, exhibits and schedules, referred to as
the "Registration Statement") under the Securities Act with respect to the New
Notes offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement. Statements made
in this Prospectus as to the contents of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such
reference. The Registration Statement may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade Center, New
York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports and other information with the Commission. Reports, proxy statements
and other information filed by the Company may be inspected and copied as
provided above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference: (i)
the Company's Annual Report on Form 10-K for the year ended December 31, 1993,
as amended by Form 10-K/A (Amendment No. 1) (ii) the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994, as amended by Form
10-Q/A (Amendment No. 1) and (iii) the Company's Current Reports on Form 8-K
dated February 15, 1994, February 25, 1994 and April 6, 1994. All documents
filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering made hereby shall be deemed to be incorporated herein by
reference and to be a part hereof from the respective dates of the filing of
such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN CERTAIN
EXHIBITS TO SUCH DOCUMENTS) ARE AVAILABLE FROM THE COMPANY WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST ADDRESSED TO STEPHEN M. BRETT, ESQ., SENIOR VICE
PRESIDENT, TELE-COMMUNICATIONS, INC., TERRACE TOWER II, 5619 DTC PARKWAY,
ENGLEWOOD, COLORADO 80111-3000; TELEPHONE (303) 267-5500. IN ORDER TO ENSURE
TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
___________________ (DATE FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE).
4
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SUMMARY
The following summary information is qualified in its entirety by the
more detailed information, financial statements and pro forma financial
information appearing elsewhere in this Prospectus or incorporated by reference
herein.
THE EXCHANGE OFFER
Background . . . . . . . . In 1990, 1991 and 1992, two indirect
wholly-owned subsidiaries of the Company
issued several series of non-convertible notes
(the "Subsidiary Notes") to various
institutional investors pursuant to three
separate note purchase agreements. To reduce
the amount of outstanding indebtedness of
these subsidiaries, the Company entered into
the Note Exchange Agreement with certain of
the holders of Subsidiary Notes, providing
for the exchange (the "Initial Exchange") of
the Subsidiary Notes held by them for newly
issued Existing Notes with substantially
identical financial terms to the Subsidiary
Notes and containing substantially similar
covenants to the covenants made by the
issuers of the Subsidiary Notes. In order
to encourage holders of Subsidiary Notes to
participate in the Initial Exchange, the
Company stated in the Note Exchange Agreement
its intention to make the Exchange Offer to
holders of Existing Notes. See "The Exchange
Offer -- Purpose of the Exchange Offer;
Contingent Interest."
"Securities Offered . . . . $5,000,000 aggregate principal amount of New
Series A Notes, $26,500,000 aggregate
principal amount of New Series B Notes,
$36,000,000 aggregate principal amount of
New Series C Notes, $32,000,000 aggregate
principal amount of New Series D Notes and
$20,000,000 aggregate principal amount of New
Series E Notes. The New Notes will be issued
under the Indenture, dated as of April 15,
1994 (the "Indenture"), between the Company
and The Bank of New York, as trustee (the
"Trustee").
The terms of each series of New Notes are
substantially identical to the terms of the
corresponding series of Existing Notes that
are to be exchanged therefor, except as
described under "Comparison of Existing
Notes and New Notes" and except that the
New Notes have been registered under the
Securities Act.
The Exchange Offer . . . . Each series of New Notes is being offered in
exchange for a like principal amount of the
corresponding series of Existing Notes. The
Existing Notes may be exchanged only in
integral multiples of $100,000. The Company
is making the Exchange Offer in order to
provide holders of Existing Notes with freely
transferable securities (except as provided
herein) and to avoid the increase in interest
rates provided for pursuant to the Note
Exchange Agreement if the Exchange Offer is
not made. See "The Exchange Offer -- Purpose
of the Exchange Offer; Contingent Interest".
For a description of the
5
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procedures for tendering, see "The Exchange
Offer -- Procedures for Tendering Existing
Notes."
Resale . . . . . . . . . The New Notes issued pursuant to the Exchange
Offer in exchange for Existing Notes may be
offered for resale, resold and otherwise
transferred by holders thereof (other than
any such holder that is an "affiliate" of
the Company within the meaning of Rule 405
under the Securities Act) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided
that such New Notes are acquired in the
ordinary course of such holder's business and
such holder has no arrangement with any person
to participate in the distribution of such New
Notes.
If any person were to be participating
in the Exchange Offer for the purpose of
distributing securities in a manner not
permitted by the preceding paragraph, such
person must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with a secondary
resale transaction. See "The Exchange Offer
-- Purpose of the Exchange Offer; Contingent
Interest".
Expiration Date; Withdrawal . . The Exchange Offer will expire at 12:00
p.m., New York City time, on
_____________________, 1994, unless the
Exchange Offer is extended, in which case the
term "Expiration Date" means the latest date
and time to which the Exchange Offer is
extended. Existing Notes tendered pursuant to
the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. Any
Existing Notes not accepted for exchange for
any reason will be returned without expense to
the tendering holders thereof as promptly as
practicable after the expiration or
termination of the Exchange Offer.
Conditions to the
Exchange Offer . . . . . . The Exchange Offer is subject to certain
conditions. See "The Exchange Offer --
Certain Conditions to the Exchange Offer".
The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Existing
Notes being tendered for exchange.
No Federal or state regulatory
requirements must be complied with or
approvals obtained in connection with the
Exchange Offer, other than applicable
requirements under Federal and state
securities laws.
Certain Federal Income
Tax Considerations.. . . . . Generally, for Federal income tax purposes,
holders of Existing Notes should not
recognize any taxable gain or loss as a result
of the exchange of their Existing Notes for
New Notes. See "Certain Federal Income Tax
Considerations".
Untendered Existing Notes . . Holders of Existing Notes who do not tender
their Existing Notes in the Exchange Offer or
whose Notes are not accepted for exchange will
continue to hold such Existing Notes and will
be entitled to all the rights and preferences
and will be subject to the limitations
applicable thereto under the Note Exchange
Agreement, except for any such rights or
limitations which, by their terms, terminate
or cease to be
6
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effective as a result of the Exchange Offer.
See "Comparison of Existing Notes and New
Notes -- Payment Provisions -- Repurchases".
If the Exchange Offer is consummated, such
Existing Notes will not be entitled to the
benefits of the provisions of the Note
Exchange Agreement relating to the contingent
increase in the interest rate applicable to
the Existing Notes if the Exchange Offer is
not consummated by a specified date; no
Contingent Interest will accrue or be payable
with respect to such Existing Notes and the
holders thereof will not have any right
to require the Company to register the
Existing Notes or to make an exchange offer of
registered securities for such Existing Notes.
All untendered and tendered but unaccepted
Existing Notes will continue to be subject to
the existing restrictions on transfer
thereof. To the extent that Existing Notes
are tendered and accepted in the Exchange
Offer, the trading market, if any exists or
develops, for untendered and tendered but
unaccepted Existing Notes could be adversely
affected. See "Certain Considerations --
Restrictions on Transfer; Consequences of
Failure to Exchange".
Contingent Interest . . . . Pursuant to the Note Exchange Agreement,
because the Issue Date (as defined below)
of the New Notes had not occurred by the
close of business on December 31, 1993, the
rate per annum at which interest accrues
on each Existing Note increased, contingently,
by 0.2% effective January 1, 1994 (the
"Interest Rate Adjustment") and the
incremental interest that accrues as a result
of such adjustment (the "Contingent Interest")
will be payable on the earlier of the Issue
Date or June 30, 1994, and thereafter (if
applicable) on the regular interest payment
date for such Existing Note; provided that
such Interest Rate Adjustment, and the accrual
and payment of the Contingent Interest that
would otherwise result therefrom, are
contingent upon the tender and acceptance for
exchange of such Existing Note if the Issue
Date occurs prior to June 30, 1994. The
interest rate on the Existing Notes will be
restored to the initial rate on the Issue
Date, if the same occurs prior to June 30,
1994, and the amount of Contingent Interest
that accrued from January 1, 1994 to and
including the Issue Date on those Existing
Notes that have been tendered and accepted for
exchange will be payable to the tendering
holders on the Issue Date. If the Issue Date
has not occurred prior to June 30, 1994, the
Exchange Offer will be withdrawn, the Interest
Rate Adjustment will become permanent and the
payment of the Contingent Interest will cease
to be subject to any contingencies. The Issue
Date is defined as (i) the day immediately
following the Expiration Date unless the New
Notes required to be issued in exchange for
tendered and accepted Existing Notes have
not been authenticated by the Trustee within
three Business Days after the Expiration Date
or (ii) if later, the date such New Notes are
actually authenticated by the Trustee.
Exchange Agent . . . . . . The Bank of New York, the Trustee under the
Indenture, is serving as exchange agent
(the "Exchange Agent") in connection with the
Exchange Offer. The mailing address of the
Exchange Agent is: The Bank of New York, 101
Barclay Street (7 East), Reorganization
7
<PAGE> 10
Section, New York, New York 10286, Attention:
Enrique Lopez. Hand deliveries and deliveries
by overnight courier should be addressed to
The Bank of New York, 101 Barclay Street (7
East), Reorganization Section, Corporate Trust
Services Window, New York, New York 10286,
Attention: Enrique Lopez. For information
with respect to the Exchange Offer, the
telephone number for the Exchange Agent is
(212) 815-2742 and the facsimile number for
the Exchange Agent is (212) 571-3080.
THE NEW NOTES
Stated Maturity Dates . . . New Series A Notes: December 15, 2001
New Series B Notes: August 31, 2002
New Series C Notes: August 31, 2002
New Series D Notes: September 30, 1997
New Series E Notes: September 30, 2000
Interest Payment Dates . . New Series A Notes: June 15 and December 15
New Series B Notes: January 31 and July 31
New Series C Notes: January 31 and July 31
New Series D Notes: March 30 and September 30
New Series E Notes: March 30 and September 30
Holders whose Existing Notes are tendered
and accepted for exchange will not receive
accrued interest (other than Contingent
Interest) thereon on the date of exchange.
Instead, interest (other than Contingent
Interest) accruing from June 15, 1994
through the Expiration Date on Existing Series
A Notes accepted for exchange will be payable
on the New Series A Notes issued in exchange
therefor on December 15, 1994, interest
(other than Contingent Interest) accruing from
January 31, 1994 through the Expiration Date
on Existing Series B Notes and Existing Series
C Notes accepted for exchange will be payable
on the New Series B and New Series C Notes,
respectively, issued in exchange therefor on
July 31, 1994, and interest (other than
Contingent Interest) accruing from March 30,
1994 through the Expiration Date on the
Existing Series D Notes and Existing Series E
Notes accepted for exchange will be payable on
the New Series D Notes and New Series E Notes,
respectively, issued in exchange therefor on
September 30, 1994. See "Description of the
New Notes -- Interest".
Minimum Denominations . . . $100,000 and integral multiples of $100,000
in excess thereof.
Ranking . . . . . . . . . . The New Notes are general unsecured
obligations of the Company and will rank on
a parity in right of payment to all existing
and future unsecured and unsubordinated
indebtedness of the Company. At March 31,
1994, the Company (which, for this purpose,
does not
8
<PAGE> 11
include any of its subsidiaries) had an
aggregate of approximately $5.49 billion of
debt outstanding (including the Existing Notes
and guarantees of indebtedness of others, but
excluding indebtedness to subsidiaries),
substantially all of which would rank on a
parity in right of payment with the New
Notes. At that date, the Company (which,
for this purpose, does not include any of its
subsidiaries) also had an aggregate of
approximately $560 million in undrawn lines of
credit. See "Description of New Notes --
General".
Principal Installments . . The principal amount of the New Notes of
each series is payable, without premium,
in consecutive annual installments (each a
"Principal Installment") in the amounts per
$100,000 in Original Principal Amount of each
New Note of the applicable series and on the
dates indicated below. In the event of any
optional prepayment in part of a New Note,
however, the amount of principal so prepaid
per $100,000 in Original Principal Amount of
such Note will be applied to reduce pro rata
the amount of each Principal Installment
thereafter due and payable with respect to
such Note. See "Description of New Notes --
Principal Installments".
New Series A Notes: Principal
Installments of $20,000 are payable on
December 15, 1997, 1998, 1999 and 2000, with
the remaining balance payable on the Stated
Maturity Date.
New Series B Notes: Principal
Installments of $16,667 are payable on July
31, 1997, 1998, 1999, 2000 and 2001, with the
remaining balance payable on the Stated
Maturity Date.
New Series C Notes: Principal
Installments of $25,000 are payable on July
31, 1999, 2000 and 2001, with the remaining
balance payable on the Stated Maturity Date.
New Series D Notes: Principal
Installments of $25,000 are payable on
September 30, 1994, 1995 and 1996, with the
remaining balance payable on the Stated
Maturity Date.
New Series E Notes: Principal
Installments of $10,000, $12,500, $12,500,
$20,000 and $20,000 are payable on September
30, 1995, 1996, 1997, 1998 and 1999,
respectively, with the remaining balance
payable on the Stated Maturity Date.
Optional Prepayment . . . . The New Notes of each series are subject to
prepayment at the option of the Company, in
whole at any time or in part from time to
time, at the prepayment prices and on the
terms and conditions described under
"Description of New Notes -- Optional
Prepayment".
Optional Redemption of
Non-Consenting Notes . . . . If the Company has requested in writing the
consent of the holders of the outstanding New
Notes to a Prohibited Act or if at any time on
or after December 1, 1999, the Company has
requested in writing the
9
<PAGE> 12
consent of the holders of the outstanding
New Notes to Increased Debt Capacity and, in
either case, the Company has not received the
consent thereto of a Majority-in-Interest of
Holders of the New Notes within 30 days
thereafter, the Company at its option may
redeem all but not less than all of the Non-
Consenting Notes at the redemption prices and
on the terms and conditions described under
"Description of New Notes -- Optional
Redemption". See "Description of New Notes --
Certain Definitions".
Change of Control . . . . . With respect to the New Notes of each series,
if a Put Event occurs at any time after the
date on which New Notes of such series are
first issued and on or prior to the Stated
Maturity Date of the New Notes of such series,
each holder will have the right, as provided
in and subject to the terms of the Indenture,
at such holder's option to require the Company
to purchase all or any portion (such portion
to be $100,000 in Original Principal Amount or
an integral multiple thereof) of such holder's
New Notes of such series at a purchase price
equal to 100% of the unpaid principal amount
of such New Note (or such portion), plus
accrued and unpaid interest thereon to the
date of repurchase. See "Description of New
Notes -- Change of Control".
Certain Additional
Covenants . . . . . . . . The Indenture contains certain additional
covenants which, among other things, impose
certain restrictions on the ability of the
Company or any Restricted Subsidiary to (i)
pay or declare dividends, repurchase stock or
make certain other payments, (ii) make certain
loans or investments or provide certain
guarantees, (iii) create certain liens, (iv)
incur certain additional Indebtedness, (v)
repay certain Indebtedness owed to
Unrestricted Subsidiaries, (vi) merge or
consolidate with, or acquire the stock or
assets of, any person, (vii) sell assets or
notes or accounts receivable, (viii) sell
stock or Indebtedness of a Restricted
Subsidiary, (ix) take or permit to be taken
certain actions involving employee benefit
plans which are covered by ERISA, and (x)
engage in certain transactions with
affiliates. The Indenture also contains
covenants which require the Company to
maintain Annualized Cash Flow at not less than
110% of Consolidated Debt Service, prohibit
the Company from deriving less than 80% of its
Gross Revenues from sources other than the
CATV Business and impose certain requirements
if the Company is included in a consolidated
income tax return with any person other than a
subsidiary. Each of the foregoing covenants
are subject to certain exceptions. See
"Description of New Notes -- Certain
Covenants" and "-- Certain Definitions".
Events of Default . . . . . See "Description of New Notes -- Defaults
and Remedies".
10
<PAGE> 13
THE COMPANY
The Company or its predecessor companies have been principally engaged in
the acquisition, development and operation of cable television systems since
the early 1950's. The Company believes that, measured by the number of basic
subscribers, it is the largest provider of basic cable television services in
the United States. At December 31, 1993, the Company, through its subsidiaries
and affiliates, operated cable television systems throughout the continental
United States and Hawaii. Through certain joint ventures, the Company also has
cable television systems and related investments in the United Kingdom and
other parts of Europe. Unless the context indicates otherwise, the "Company"
means Tele-Communications, Inc. and its consolidated subsidiaries.
The Company and Liberty Media Corporation ("Liberty") have entered into an
Agreement and Plan of Merger, dated as of January 27, 1994, as amended (the
"Merger Agreement"), providing for a combination of the two companies (the
"TCI/Liberty Combination"). The TCI/Liberty Combination would be effected
through the merger of the Company and the merger of Liberty with separate
wholly-owned subsidiaries of a new holding company formed by the Company and
Liberty, TCI/Liberty Holding Company ("TCI/Liberty"). The Company and Liberty
would each be the surviving corporation of its respective merger and, after
giving effect to the transaction, would each be a wholly-owned subsidiary of
TCI/Liberty. Consummation of the TCI/Liberty Combination is subject to the
approval of the respective stockholders of each company, the receipt of
necessary governmental and regulatory approvals and other customary conditions.
If the TCI/Liberty Combination occurs, TCI/Liberty will change its name to
"Tele-Communications, Inc." and the Company will change its name to "TCI
Communications, Inc." The Company will continue to be the obligor with respect
to the Existing Notes, the New Notes following their issuance, and all other
indebtedness and other obligations of the Company outstanding at the time the
TCI/Liberty Combination is consummated, and TCI/Liberty will not assume any of
such indebtedness or other obligations. See "Recent Developments".
11
<PAGE> 14
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth selected historical financial data for the
Company for the three-month periods ended March 31, 1994 and 1993 and for each
of the five fiscal years in the period ended December 31, 1993. The table also
sets forth selected unaudited pro forma balance sheet data for the Company as
of March 31, 1994, giving pro forma effect to the TCI/Liberty Combination
as if the same had occurred as of March 31, 1994, and selected unaudited pro
forma statement of operations data for the Company for the three months ended
March 31, 1994 and for the year ended December 31, 1993, giving pro forma
effect to the TCI/Liberty Combination and another transaction (see note (1)
below) as if the same had occurred prior to January 1, 1994 and prior to
January 1, 1993, respectively. See "Recent Developments". The pro forma
financial data are not necessarily indicative of the financial position or
results of operations that would have been obtained had the TCI/Liberty
Combination and such other transaction been effective at or prior to such
assumed dates, or of the future results of operations of the Company. The
following information is qualified in its entirety by, and should be read in
conjunction with, the consolidated financial statements of the Company and the
unaudited condensed pro forma financial statements of the Company incorporated
by reference in this Prospectus.
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, Year Ended December 31,
- ------------------------------------------------------------------- -------------------------------------------------
Pro Forma Pro Forma
1994(1) 1994 1993 1993(1) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
Revenue . . . . . . . . . . . . . $ 1,060 1,060 1,018 4,153 4,153 3,574 3,214 2,940 2,358
Operating income . . . . . . . . . $ 234 234 247 916 916 864 674 546 455
Earnings (loss) from:
Continuing operations . . . . . . $ 24 32 53 (9) (7) 7 (78) (191) (262)
Discontinued operations . . . . . -- -- -- -- -- (15) (19) (63) (3)
------- ----- ----- ------ ----- ----- ----- ----- -----
24 32 53 (9) (7) (8) (97) (254) (265)
Dividend requirement on
redeemable preferred
stocks . . . . . . . . . . . . . -- -- (1) -- (2) (15) -- -- --
------- ----- ----- ------ ----- ----- ----- ----- -----
Net earnings (loss) attributable
to common shareholders. . . . . . $ 24 32 52 (9) (9) (23 ) (97) (254) (265)
======= ===== ===== ====== ===== ===== ===== ===== =====
Earnings (loss) attributable
to common shareholders
per common share:
Continuing operations . . . . . N/A $.07 .11 N/A (.02) (.01) (.22) (.54) (.74)
Discontinued operations . . . . N/A -- -- N/A -- (.04) (.05) (.18) (.01)
$.07 $.11 (.02) (.05) (.27) (.72) (.75)
===== ===== ===== ===== ===== ===== =====
Weighted average common
shares outstanding . . . . . . . N/A 492 469 N/A 433 424 360 355 353
</TABLE>
(Continued on next page)
12
<PAGE> 15
(In millions)
<TABLE>
<CAPTION>
March 31, December 31,
--------------------- --------------------------------------
Pro Forma
1994(2) 1994 1993 1992 1991 1990 1989
--------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA:
Property and equipment, net . . . . . $ 5,026 5,026 4,935 4,562 4,081 4,156 3,692
Franchise costs, net . . . . . . . . $ 9,141 9,141 9,197 9,300 8,104 7,348 6,811
Net assets of discontinued
operations . . . . . . . . . . . . $ -- -- -- -- 242 54 580
Total assets . . . . . . . . . . . . $16,851 17,058 16,520 16,310 15,166 14,106 13,560
Debt . . . . . . . . . . . . . . . . $10,008 10,008 9,900 10,285 9,455 8,922 8,007
Common stockholders' equity . . . . . $ 2,147 2,354 2,112 1,726 1,570 748 840
Shares outstanding
(net of treasury shares):
Class A common stock . . . . . . . N/A 404 403 382 370 310 305
Class B common stock . . . . . . . N/A 47 47 48 49 48 48
</TABLE>
- ---------------
(1) Reflects the elimination in the proposed TCI/Liberty Combination of the
Company's share of Liberty's historical earnings, the elimination of the
historical dividend requirement on the Company's redeemable preferred stocks,
which were converted into shares of the Company's Class A common stock
subsequent to December 31, 1993, and the income tax effect of the pro forma
adjustments.
(2) Reflects the conversion in the proposed TCI/Liberty Combination of the
Company's investment in Liberty common stock and preferred stock into an
investment in TCI/Liberty common stock and preferred stock, respectively, at
the carryover basis of the Company's investment in Liberty. Such amount is
reflected as a reduction of stockholders' equity due to its related party
nature.
13
<PAGE> 16
CERTAIN CONSIDERATIONS
The following factors, among others, should be considered carefully
before making an investment decision with respect to the New Notes.
Losses. The Company has incurred a net loss in each of the last three
fiscal years and losses from continuing operations in the fiscal years ended
December 31, 1993 and December 31, 1991. The Company had net earnings for the
three-month periods ended March 31, 1994 and 1993. See "Summary -- Selected
Historical and Pro Forma Financial Data". Notwithstanding the losses it has
incurred, the Company has been able to, and expects to continue to be able to,
satisfy its debt service and other obligations as and when they become due.
The Company's operating income before depreciation, amortization and other
non-cash credits or charges ($1,858 million, $1,637 million and $1,430
million for the years ended December 31, 1993, 1992 and 1991, respectively,
and $450 million and $467 million for the three months ended March 31, 1994 and
1993, respectively) has historically been sufficient to cover the Company's
interest expense ($731 million, $718 million and $826 million for the years
ended December 31, 1993, 1992 and 1991, respectively, and $178 million and
$181 million for the three months ended March 31, 1994 and 1993, respectively).
The Company's interest coverage ratio for the years ended December 31, 1993,
1992 and 1991 was 254%, 228%, and 173%, respectively, and for the three
months ended March 31, 1994 and 1993 was 253% and 258%, respectively.
Rate Regulation. On October 5, 1992, Congress enacted the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), which greatly expands Federal and local regulation of the cable
television industry. On April 15, 1993, the Federal Communications Commission
("FCC") adopted certain rate regulations as required by the 1992 Cable Act,
which regulations became effective on September 1, 1993, and imposed a
moratorium on certain rate increases. As a result of such actions, the rates
charged by a cable television company for basic and tier services and its
equipment and installation charges (the "Regulated Services") are now under the
jurisdiction of local franchising authorities and the FCC. Basic and tier
service rates are evaluated against competitive benchmark rates as published by
the FCC and equipment and installation charges are based on actual costs. The
rate regulations do not apply to the relatively few systems which are subject
to "effective competition" or to services offered on an individual service
basis, such as premium movie and pay-per-view services.
Any rates for the Company's Regulated Services that exceeded the
benchmarks were reduced as required by the 1993 rate regulations, which
provided in such circumstances for the reversal of any rate increases effected
since September 30, 1992 and further reductions of up to 10%. The Company
initially estimated that, on an annualized basis, implementation of the 1993
rate regulations would result in a reduction to revenue ranging from $140
million to $160 million. As a result of the implementation by the Company on
September 1, 1993 of its new rates for Regulated Services, the Company
experienced a revenue reduction of approximately $44 million during the four
months ended December 31, 1993 and approximately $35 million during the three
months ended March 31, 1994. The rates charged by the Company for Regulated
Services are subject to review by the FCC if a complaint has been filed or by
the appropriate local franchising authority if such authority has been
certified. For those franchise areas in which the rates for Regulated Services
are not yet so subject to review by the FCC or a local franchising authority,
the rate increase moratorium continues in effect through May 15, 1994.
On February 22, 1994, the FCC announced that it had adopted revised
rate regulations, including revised benchmarks, for Regulated Services,
which regulations became effective on May 15, 1994. Regulated cable systems
will have a 60-day period in which to implement new rates that comply with the
1994 rate regulations provided that certain requirements are met, including
continued compliance on a voluntary basis with the moratorium on rate
increases. Cable television systems that do not elect to make a
cost-of-service showing are required to set their rates for Regulated Services
at a level equal to the higher of the FCC's revised benchmark rates or the
system's September 30, 1992 rates minus 17%. Accordingly, the revised
regulations may result in additional rate reductions of up to 7% beyond the
maximum reductions established under the FCC's 1993 rate regulations. Based on
the FCC Executive Summary included in the February 22 announcement, the Company
estimated that its revenue could be
14
<PAGE> 17
further decreased by approximately $144 million on an annualized basis. The
text of the FCC's revised rate regulations was released on March 30, 1994.
Pending a detailed analysis of the new rules and of the Company's rates and
services, the Company cannot determine whether the actual reduction in revenue
will differ materially from the original estimate of $144 million on an
annualized basis.
The Company's estimates of the revenue reductions that may result from
the FCC's actions in 1993 and 1994 are prior to any possible mitigating factors
(none of which is assured) such as (i) the provision of alternate service
offerings, (ii) the implementation of rate adjustments to non-regulated
services, and (iii) the utilization of cost-of-service methodologies. The FCC
has adopted interim "cost-of-service" rules which would allow a cable operator
to recover, through rates charged for Regulated Services, its normal operating
expenses plus an interim rate of return of 11.25%, which rate may change in the
future. However, the FCC has presumptively excluded from the rate base
acquisition costs above the book value of tangible assets and of allowable
intangible assets at the time of acquisition, has declined to prescribe
depreciation rates and has suggested that the rules will have limited
usefulness for cable operators.
Based on the foregoing, the Company believes that the 1993 and 1994
rate regulations will have a material adverse effect on its results of
operations.
Ratios of Earnings to Fixed Charges. The ratio of earnings to fixed
charges of the Company was 1.03 and 1.22 for the years ended December 31, 1992
and 1993, respectively, and 1.43 and 1.25 for the three months ended March 31,
1993 and 1994, respectively. The ratio of earnings to fixed charges was less
than 1.00 for the years ended December 31, 1989, 1990 and 1991; thus, earnings
available for fixed charges were inadequate to cover fixed charges for such
periods. The amounts of the coverage deficiencies were $430 million, $399
million and $177 million for the years ended December 31, 1989, 1990 and 1991,
respectively. For the ratio calculations, earnings available for fixed charges
consist of earnings (losses) before income taxes plus fixed charges (minus
capitalized interest), distributions from and (earnings) losses of less than
50%-owned affiliates with debt not guaranteed by the Company (net of earnings
not distributed of less than 50%-owned affiliates), and minority interest in
earnings (losses) of consolidated subsidiaries (including preferred stock
dividend requirements of consolidated subsidiaries). Fixed charges consist of
(i) interest (including capitalized interest) on debt, excluding interest to
50%-owned affiliates, (ii) the Company's proportionate share of interest of
50%-owned affiliates, (iii) that portion of rental expense the Company believes
to be representative of interest (one third of rental expense), (iv)
amortization of debt expense, (v) that portion of minority interest in earnings
of consolidated subsidiaries that represents preferred stock dividend
requirements excluding preferred stock dividend requirements of consolidated
subsidiaries to 50%-owned affiliates, and (vi) preferred stock dividend
requirements of 50%-owned affiliates, other than amounts to the Company. The
Company has guaranteed the debt of certain less than 50%-owned affiliates and
certain other entities in which it has an interest. Fixed charges of $745,000,
$710,000, $506,000, $2,517,000 and $13,833,000 relating to such guarantees for
the years ended December 31, 1989, 1990, 1991, 1992 and 1993, respectively, and
fixed charges of $629,000 and $3,458,000 relating to such guarantees for the
three months ended March 31, 1993 and 1994, respectively, have not been
included in fixed charges.
Restrictions on Transfer; Consequences of Failure to Exchange.
Existing Notes that are not tendered or are tendered but not accepted for
exchange will, following the consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof and the Company will
have no obligation to provide for the registration under the Securities Act of
such Existing Notes or to make any offer to exchange registered securities for
such Existing Notes. No Interest Rate Adjustment will be made and no
Contingent Interest will accrue or be payable with respect to Existing Notes
that are not tendered or are tendered but not accepted for exchange.
Each holder (other than any holder who is an affiliate of the Company
within the meaning of Rule 405 under the Securities Act) who duly exchanges
Existing Notes for New Notes in the Exchange Offer will receive New Notes that
are freely tradeable under the Securities Act provided that such holder
acquired the New Notes in the ordinary course of its business and is not
participating, and has no arrangement with any person to participate, in
15
<PAGE> 18
the distribution of such New Notes. Accordingly, any holder of Existing Notes
who tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. To the extent that Existing Notes are tendered and
accepted in the Exchange Offer, the trading market, if any exists or develops,
for untendered and tendered but unaccepted Existing Notes could be adversely
affected.
THE COMPANY
The Company is a Delaware corporation incorporated in 1968 with
executive offices at Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado
80111-3000; telephone (303) 267-5500. Unless the context indicates otherwise
and except as used in the discussions under the captions "Description of New
Notes" and "Comparison of Existing Notes and New Notes", the "Company" means
Tele-Communications, Inc. and its consolidated subsidiaries.
The Company or its predecessor companies have been principally engaged
in the acquisition, development and operation of cable television systems since
the early 1950's. The Company believes that, measured by the number of basic
subscribers, it is the largest provider of basic cable television services in
the United States. At March 31, 1994, the Company, through its
subsidiaries and affiliates, operated cable television systems throughout the
continental United States and Hawaii. Through certain joint ventures, the
Company also has cable television systems and related investments in the United
Kingdom and other parts of Europe.
RECENT DEVELOPMENTS
The Company and Liberty have entered into the Merger Agreement which
provides for a combination of the two companies. The TCI/Liberty Combination
would be effected through the merger of the Company and the merger of Liberty
with separate wholly-owned subsidiaries of a new holding company, TCI/Liberty,
formed by the Company and Liberty. The Company and Liberty would each be the
surviving corporation of its respective merger and, after giving effect to the
transaction, would each be a wholly-owned subsidiary of TCI/Liberty. In the
transaction, the outstanding shares of each class of the Company's common stock
(including shares held by Liberty and shares held by subsidiaries of the
Company, but excluding shares held by the Company directly in its treasury)
would be converted into shares of the corresponding class of TCI/Liberty's
common stock on the basis of one share of TCI/Liberty common stock for each
share of the Company's common stock, and the outstanding shares of each class
of Liberty's common stock (including shares held by the Company, but excluding
shares held by Liberty in its treasury) would be converted into shares of the
corresponding class of TCI/Liberty's common stock on the basis of 0.975 of a
share of TCI/Liberty common stock for each share of Liberty's common stock.
Shares of one class of outstanding preferred stock of Liberty (including shares
owned by the Company) would be converted into shares of a class of preferred
stock of TCI/Liberty having designations, preferences, rights and
qualifications, limitations and restrictions substantially identical to the
shares of preferred stock being converted. Shares of the remaining two classes
of preferred stock of Liberty, all of which are held by the Company, would be
converted into shares of equivalent value of a class of preferred stock of
TCI/Liberty. Liberty was initially a wholly-owned subsidiary of the Company
formed for the purpose of effectuating a restructuring of the Company's
interests in certain cable programming businesses and cable television
interests. Pursuant to the plan for such restructuring, in early 1991 the
Company contributed certain of its programming and cable television assets to
Liberty in exchange for shares of several classes of Liberty's preferred stock,
and Liberty effected an exchange offer of shares of Liberty's common stock for
a portion of the outstanding shares of the Company's common stock, thereby
becoming a separate public company. Due to the significant economic interest
in Liberty held by the Company through its ownership of equity securities of
Liberty and other related party considerations, the Company has accounted for
its investment in Liberty under the equity method. Accordingly, the Company
has not recognized any income relating to dividends, including preferred stock
dividends, and the Company has continued to record the earnings or losses
generated by the interests contributed to Liberty (by recognizing 100% of
Liberty's earnings or losses before deducting preferred stock dividends). For
summary information with respect to the pro forma effect of the TCI/Liberty
Combination on the
16
<PAGE> 19
Company's financial condition and results of operations, see "Summary --
Selected Historical and Pro Forma Financial Data".
The TCI/Liberty Combination is subject to the approval of the
respective stockholders of each company, the receipt of necessary governmental
and regulatory approvals and other customary conditions. If the TCI/Liberty
Combination occurs, TCI/Liberty will change its name to "Tele-Communications,
Inc." and the Company will change its name to "TCI Communications, Inc." The
Company will continue to be the obligor with respect to the Existing Notes, the
New Notes following their issuance, and all other indebtedness and other
obligations of the Company outstanding at the time the TCI/Liberty Combination
is consummated, and TCI/Liberty will not assume any of such indebtedness or
other obligations.
THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and in the related Letter of
Transmittal (which together constitute the Exchange Offer), to exchange up to
$5,000,000 aggregate principal amount of New Series A Notes for a like
aggregate principal amount of Existing Series A Notes, up to $26,500,000
aggregate principal amount of New Series B Notes for a like aggregate principal
amount of Existing Series B Notes, up to $36,000,000 aggregate principal amount
of New Series C Notes for a like aggregate principal amount of Existing Series
C Notes, up to $32,000,000 aggregate principal amount of New Series D Notes for
a like aggregate principal amount of Existing Series D Notes and up to
$20,000,000 aggregate principal amount of New Series E Notes for a like
aggregate principal amount of Existing Series E Notes properly tendered on or
prior to the Expiration Date and not withdrawn as permitted pursuant to the
procedures described below. An aggregate of $119,500,000 principal amount of
Existing Notes are outstanding. The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Existing Notes being tendered. The
Company will issue New Notes in denominations of $100,000 and integral
multiples thereof in exchange for Existing Notes of the corresponding series
and of like aggregate principal amount accepted for exchange in the Exchange
Offer. Holders may tender some or all of their Existing Notes pursuant to the
Exchange Offer in denominations of $100,000 and integral multiples thereof.
PURPOSE OF THE EXCHANGE OFFER; CONTINGENT INTEREST
In the Note Exchange Agreement, the Company stated its then intention
to make the Exchange Offer and agreed that if the Issue Date for the New Notes
to be issued in exchange for Existing Notes tendered and accepted pursuant to
the Exchange Offer had not occurred by the close of business on December 31,
1993, the rate per annum at which interest accrues on each series of Existing
Notes would be increased, contingently, by 0.2% effective as of January 1,
1994, and that if the Issue Date had not occurred prior to June 30, 1994, the
Interest Rate Adjustment would become permanent. The Company's purpose in
making the Exchange Offer is to avoid the contingent increase in the interest
rates applicable to the Existing Notes provided for pursuant to the Note
Exchange Agreement becoming a permanent increase. If the Issue Date occurs
prior to June 30, 1994, the interest rate applicable to those Existing Notes
that are tendered and accepted for exchange pursuant to the Exchange Offer will
be restored to the initial rate applicable thereto and the amount of the
Contingent Interest that has accrued on such Existing Notes from January 1,
1994 to and including the Issue Date will be payable on the Issue Date to the
tendering holders thereof. No Interest Rate Adjustment will be made, and no
Contingent Interest will accrue or be payable, with respect to those Existing
Notes that are not tendered and accepted for exchange in the Exchange Offer if
the Issue Date occurs prior to June 30, 1994. See "Summary -- The Exchange
Offer -- Contingent Interest".
The Exchange Offer provides holders of Existing Notes with New Notes
that will generally be freely transferable by holders thereof (other than any
holder who is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act), who may offer for resale, resell or otherwise
transfer such New Notes without
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complying with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and such holder is not participating, and has no
arrangement with any person to participate, in a distribution of the New Notes.
By tendering Existing Notes and executing the Letter of Transmittal, the holder
thereof is representing to the Company that it acquired the New Notes in the
ordinary course of its business and that it is not participating in, and has no
arrangement with any person to participate in, a distribution of the New Notes.
Any holder of Existing Notes who tenders in the Exchange Offer for the purpose
of participating in a distribution of the New Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction.
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer will expire at 12:00 p.m., New York City time, on
_____________, 1994, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" means the latest time
and date to which the Exchange Offer is extended.
The Company expressly reserves the right at any time and from time to
time to extend the period of time during which the Exchange Offer remains open
by giving oral notice (confirmed in writing) or written notice of such
extension to the Exchange Agent and either by mailing an announcement thereof
to the record holders of Existing Notes or by making a timely public
announcement of such extension communicated, unless otherwise required by
applicable law or regulation, by making a release through the Dow Jones News
Service, in each case, no later than 9:00 a.m., New York City time on the next
business day following the previously scheduled Expiration Date. During any
such extension, all Existing Notes previously tendered will remain subject to
the Exchange Offer.
In addition, the Company expressly reserves the right, prior to the
first acceptance of tendered Existing Notes, (i) to delay acceptance for
exchange of any tendered Existing Notes or to terminate the Exchange Offer and
not accept for exchange any Existing Notes, subject to the provisions of Rule
14e-1(c) under the Exchange Act which requires that the tender offeror pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of the Exchange Offer, and (ii) to amend the terms of
the Exchange Offer. If any such delay in acceptance, termination or amendment
occurs, the Company will notify the Exchange Agent and will either issue a press
release or give oral or written notice thereof to the holders of Existing Notes
as promptly as practicable.
If any amendment by the Company of the Exchange Offer constitutes a
material change in the information previously disclosed to the holders of
Existing Notes, the Company will, in accordance with the applicable rules of
the Commission, disseminate promptly disclosure of such change in a manner
reasonably calculated to inform such holders of such change. If it is
necessary to permit an adequate dissemination of information regarding such
material change, the Company will extend the Exchange Offer to permit adequate
time for holders of Existing Notes to consider the additional information.
For purposes of the Exchange Offer, a "business day" means any day
other than Saturday, Sunday or a Federal holiday, and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Existing Notes and may terminate or amend the Exchange Offer, if at
any time before the acceptance of such Existing Notes for exchange, any
material change occurs which is likely to affect the Exchange Offer, including,
but not limited to, the following:
(a) there shall be threatened, instituted or pending any
action or proceeding before, or any injunction, order or decree shall
have been issued by, any court or any governmental agency relating,
directly or indirectly, to the Exchange Offer or any other transaction
contemplated by the Exchange Offer or otherwise affecting the Company
which, in the sole judgment of the Company, would or might prohibit,
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restrict or delay consummation of the Exchange Offer or otherwise
impair the ability of the Company to proceed with the Exchange Offer;
(b) there shall occur any development in any pending action
or proceeding which, in the sole judgment of the Company, would or
might prohibit, restrict or delay consummation of the Exchange Offer
or otherwise impair the ability of the Company to proceed with the
Exchange Offer;
(c) any law, statute, rule or regulation shall have been
proposed, adopted, enacted or made applicable, or any action shall
have been taken by any governmental authority which, in the sole
judgment of the Company, would or might prohibit, restrict or delay
consummation of the Exchange Offer or otherwise impair the ability of
the Company to proceed with the Exchange Offer;
(d) there exists, in the sole judgment of the Company, any
actual or threatened legal impediment (including a default or
prospective default under any agreement, indenture or other instrument
or obligation to which the Company is a party or by which it is bound)
to the consummation of the Exchange Offer; or
(e) there shall occur a change in the current interpretation
of the staff of the Commission which interpretation permits the New
Notes issued pursuant to the Exchange Offer in exchange for the
Existing Notes to be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that
such New Notes are acquired in the ordinary course of such holders'
business and such holders are not participating in, and have no
arrangement with any person to participate in, the distribution of
such New Notes.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
any such condition or may be waived by the Company in whole or in part at any
time and from time to time in its sole discretion. The failure by the Company
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Existing
Notes tendered, and no New Notes will be issued in exchange for any such
Existing Notes, if at such time any stop order shall be threatened by the
Commission or be in effect with respect to the Registration Statement or the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA").
The Exchange Offer is not conditioned on any minimum principal amount
of Existing Notes being tendered for exchange.
PROCEDURES FOR TENDERING EXISTING NOTES
The tender to the Company of Existing Notes by a holder thereof as set
forth below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal.
A holder of Existing Notes may tender Existing Notes by (a) properly
completing and signing the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof) and delivering the same, together with the Existing
Notes being tendered and any required signature guarantees, to the Exchange
Agent at its address set forth under "-- Exchange Agent" below on or prior to
the Expiration Date, or (b) complying with the guaranteed delivery procedures
described below.
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THE METHOD OF DELIVERY OF EXISTING NOTES, LETTERS OF TRANSMITTAL AND
ALL OTHER DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT
REQUESTED, BE USED, AND PROPER INSURANCE BE OBTAINED. IN ALL CASES SUFFICIENT
TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. NO EXISTING NOTES OR LETTERS
OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY.
Only a holder of Existing Notes may tender such Existing Notes in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Existing Notes are registered in the Note Register
maintained by the Company. New Notes will not be issued in the name of a
person other than that of the registered holder of the Existing Notes appearing
on the Note Register. Any beneficial holder whose Existing Notes are
registered in the name of a nominee and that wishes to tender should contact
such registered holder promptly and instruct such registered holder to tender
on its behalf. If such beneficial holder wishes to tender on its own behalf,
the beneficial holder must, prior to completing and executing the Letter of
Transmittal and delivering its Existing Notes, makes appropriate arrangements
to register ownership of the Existing Notes in such beneficial holder's name.
If the Letter of Transmittal is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or others
acting in a fiduciary or representative capacity, such person should so
indicate when signing, and unless waived by the Company, evidence satisfactory
to the Company of such person's authority to so act must be submitted with the
Letter of Transmittal.
If New Notes are to be delivered to an address other than that of the
registered holder appearing on the Note Register, the signature on the Letter
of Transmittal must be guaranteed by a commercial bank or trust company having
an office or correspondent in the United States, or by a member firm of a
national securities exchange or the National Association of Securities Dealers,
Inc. or by another Eligible Guarantor Institution within the meaning of Rule
17(A)(d)-15 under the Exchange Act (any of the foregoing is hereinafter
referred to as an "Eligible Institution").
If a holder desires to tender Existing Notes pursuant to the Exchange
Offer and such holder's Existing Notes are not immediately available or time
will not permit all of the above documents to reach the Exchange Agent prior to
the Expiration Date, such tender may be effected if the following conditions are
satisfied:
(a) such tenders are made by or through an Eligible
Institution;
(b) a properly completed and duly executed Notice
of Guaranteed Delivery, in substantially the form provided by the
Company, is received by the Exchange Agent as provided below on or
prior to the Expiration Date; and
(c) the Existing Notes, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal and
all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within five New York Stock Exchange,
Inc. trading days after the date of execution of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile transmission or mail to the Exchange Agent and must
set forth the name and address of the holder of the Existing Notes, the series
and serial number of such Existing Notes and the principal amount of Existing
Notes tendered, state that the tender is being made timely and include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed Letter of Transmittal accompanied by Existing
Notes or a Notice of Guaranteed Delivery from an Eligible Institution is
received by the Exchange Agent. Issuances of New Notes in exchange for
Existing Notes tendered pursuant to a Notice of Guaranteed Delivery by an
Eligible Institution will be made only against delivery of the Letter of
Transmittal (and any other required documents) and the tendered Existing Notes
to the Exchange Agent.
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Partial tenders of Existing Notes may be made only if (i) the
principal amount tendered is equal to $100,000 or an integral multiple thereof
and (ii) the remaining untendered portion of such Existing Notes is in the
principal amount of $100,000 or an integral multiple thereof. Holders
tendering less than the entire principal amount of any Existing Note must
appropriately indicate such fact on the Letter of Transmittal accompanying the
tendered Existing Notes.
With respect to tenders of Existing Notes, the Company reserves full
discretion to determine whether the documentation is complete and generally to
determine all questions as to tenders, including the time of receipt of a
tender, the propriety of execution of any document, and all other questions as
to the validity, form, eligibility, acceptance and withdrawal of any tender,
which determination by the Company will be final and binding on all parties.
The Company reserves the right to reject any tender not in proper form or
otherwise not valid or acceptance of which may, in the opinion of the Company's
counsel, be unlawful and to waive any irregularities or conditions, and the
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions on the Letter of Transmittal) will be final and
binding on all parties. The Company shall not be obligated to give notice of
any defects or irregularities in tenders and shall not incur any liability for
failure to give any such notice. The Exchange Agent may, but shall not be
obligated to, give notice of any irregularities or defects in tenders, and shall
not incur any liability for any failure to give any such notice. Existing Notes
shall not be deemed to have been duly or validly tendered unless and until all
defects and irregularities have been cured or waived. All improperly tendered
Existing Notes, as well as Existing Notes in excess of the principal amount
tendered for exchange, will be returned (unless irregularities and defects are
timely cured or waived),without cost to the tendering holder promptly after the
Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase and make offers to purchase Existing Notes that remain outstanding
subsequent to the Expiration Date in the open market, privately negotiated
transactions or otherwise. The terms of any such purchases or offers may
differ from the Exchange Offer.
WITHDRAWAL RIGHTS
Tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date, unless previously accepted for exchange. To be effective, a
written notice of withdrawal must be received by the Exchange Agent prior to
the Expiration Date at the address set forth under "-- Exchange Agent" below.
Any such notice of withdrawal must (i) specify the person named in the Letter
of Transmittal as having tendered the Existing Notes to be withdrawn, (ii)
identify the Existing Notes to be withdrawn (including the series, the serial
number or numbers and the principal amount of such Existing Notes), and (iii)
be signed by the holder in the same manner as the original signature on the
Letter of Transmittal by which such Existing Notes were tendered (including any
required signature guarantees). Any Existing Notes so withdrawn will be deemed
not to have been validly tendered for exchange for purposes of the Exchange
Offer. The Exchange Agent will return the properly withdrawn Existing Notes as
soon as practicable following receipt of notice of withdrawal. All questions
as to the validity, form and eligibility (including time of receipt) of notices
of withdrawals will be determined by the Company in its sole discretion, which
determination will be final and binding on all parties. Properly withdrawn
Existing Notes may be retendered by following the procedures described under
"-- Procedures for Tendering Existing Notes" above at any time prior to the
Expiration Date.
ACCEPTANCE OF TENDERS
Subject to the terms and conditions of the Exchange Offer, including
the reservation of certain rights by the Company, Existing Notes properly
tendered and not withdrawn will be accepted promptly after the Expiration Date.
Subject to such terms and conditions, New Notes to be issued in exchange for
properly tendered Existing Notes will be mailed by the Exchange Agent promptly
after the acceptance of the tendered Existing Notes, and the amount of the
Contingent Interest that has accrued on such properly tendered Existing Notes
from January 1, 1994 to and including the Issue Date will be paid by the
Company by wire transfer to the account of the holders of properly tendered
Existing Notes. For purposes of the Exchange Offer, the Company will be deemed
to have accepted
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properly tendered Existing Notes for exchange when the Company has given oral or
written notice thereof to the Exchange Agent.
Holders whose Existing Notes are accepted for exchange will not
receive accrued interest (other than Contingent Interest) thereon on the date
of exchange. Instead interest (other than Contingent Interest) accruing from
June 15, 1994 through the Expiration Date on Existing Series A Notes accepted
for exchange will be payable on the New Series A Notes issued in exchange
therefor on December 15, 1994, interest (other than Contingent Interest)
accruing from January 31, 1994 through the Expiration Date on Existing Series B
Notes and Existing Series C Notes accepted for exchange will be payable on the
New Series B Notes and New Series C Notes, respectively, issued in exchange
therefor on July 31, 1994, and interest (other than Contingent Interest)
accruing from March 30, 1994 through the Expiration Date on the Existing Series
D Notes and Existing Series E Notes accepted for exchange will be payable on
the New Series D Notes and New Series E Notes, respectively, issued in exchange
therefor on September 30, 1994.
If any tendered Existing Notes are not accepted for any reason set
forth in the terms and conditions of the Exchange Offer, such unaccepted
Existing Notes will be returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or termination of the Exchange
Offer.
UNTENDERED EXISTING NOTES
Holders of Existing Notes whose Existing Notes are not tendered or are
tendered but not accepted in the Exchange Offer will continue to hold such
Existing Notes and will be entitled to all the rights and preferences and will
be subject to the limitations applicable thereto under the Note Exchange
Agreement, except for any such rights or limitations which, by their terms,
terminate or cease to be effective as a result of the Exchange Offer. See
"Comparison of Existing Notes and New Notes -- Payment Provisions --
Repurchases". No Interest Rate Adjustment will be made and no Contingent
Interest will accrue or be payable with respect to such Existing Notes.
Following consummation of the Exchange Offer, the holders of Existing Notes will
continue to be subject to the existing restrictions upon transfer thereof and
the Company will have no obligation to such holders to provide for the
registration under the Securities Act of the Existing Notes held by them or to
make an exchange offer of registered securities for such Existing Notes. To the
extent that Existing Notes are tendered and accepted in the Exchange Offer, the
trading market, if any exists or develops, for untendered and tendered but
unaccepted Existing Notes could be adversely affected.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Letters of Transmittal must be addressed to the Exchange Agent
as follows:
By Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street (7 East) 101 Barclay Street (7 East)
Reorganization Section Reorganization Section
New York, New York 10286 Corporate Trust Services Window
Attention: Enrique Lopez New York, New York 10286
Attention: Enrique Lopez
By Facsimile:
(212) 571-3080
Confirm by Telephone:
(212) 815-2742
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The Bank of New York also acts as trustee (the "Trustee") under the
Indenture. Questions regarding Exchange Offer procedures and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent as set forth above.
DELIVERY TO OTHER THAN THE ABOVE ADDRESS WILL NOT CONSTITUTE VALID
DELIVERY.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred by the Company in connection with the Exchange
Offer will be paid by the Company.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the respective dates as of
which information is given herein. The Exchange Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of Existing Notes
in any jurisdiction in which the making of the Exchange Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction.
TRANSFER TAXES
Holders who tender their Existing Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith except that holders
who request that Existing Notes not tendered or not accepted in the Exchange
Offer be returned to a person other than the registered tendering holder will
be responsible for the payment of any applicable transfer tax thereon.
ACCOUNTING TREATMENT
The New Notes will be recorded at the carrying value of the Existing
Notes as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company upon the exchange of New Notes for Existing Notes.
Expenses incurred in connection with the issuance of the New Notes will be
amortized over the term of the New Notes.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Under Federal income tax law, a holder of Existing Notes should not
recognize gain or loss upon an exchange of Existing Notes for New Notes
pursuant to the Exchange Offer. A holder's tax basis in the New Notes received
pursuant to the Exchange Offer will be the same as such holder's basis in the
Existing Notes exchanged therefor and a holder's holding period for New Notes
received pursuant to the Exchange Offer will include such holder's holding
period for the Existing Notes if such Notes were held as capital assets at the
time of the exchange.
The tax analysis is based in part on Proposed Treasury Regulation
Section 1.1001-3(a). The regulations on which these conclusions rely are
proposed, not final. Although the Internal Revenue Service could generally be
expected to follow the approach set forth in proposed regulations of this type,
there is no requirement that it do so. Proposed regulations may be withdrawn,
may be made prospective only, or may be changed in whole or in part before they
are made final. Additionally, either the Internal Revenue Service or the
courts may subsequently determine that the proposed regulations (to the extent
they are favorable to taxpayers) are inconsistent with case law
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<PAGE> 26
or otherwise invalid. A United States Supreme Court decision, Cottage Savings
Association v. Commissioner, issued prior to the issuance of Proposed Treasury
Regulation Section 1.1001-3(a) could be interpreted to require the recognition
of gain or loss upon an exchange of Existing Notes for New Notes pursuant to the
Exchange Offer. Notwithstanding Proposed Treasury Regulation Section
1.1001-3(a), a court therefore could treat such exchange as a taxable exchange.
Finally, the tax analysis assumes that the New Notes are being issued for the
Existing Notes, and does not take into account prior exchanges involving the
Existing Notes. If the exchange of New Notes for Existing Notes is integrated
with prior exchanges, the tax consequences could be different.
Each exchanging holder should consult with his individual tax advisor
as to any foreign, state and local tax consequences of the Exchange Offer as
well as to the effect of his particular facts and circumstances on the matters
discussed herein.
DESCRIPTION OF NEW NOTES
GENERAL
The Company issued $5,000,000 aggregate principal amount of Existing
Series A Notes, $26,500,000 aggregate principal amount of Existing Series B
Notes, $36,000,000 aggregate principal amount of Existing Series C Notes,
$40,000,000 aggregate principal amount of Existing Series D Notes and
$20,000,000 aggregate principal amount of Existing Series E Notes pursuant to
the Note Exchange Agreement on July 1, 1993. A subsequent principal payment
with respect to the Existing Series D Notes reduced the aggregate outstanding
principal amount thereof to $32,000,000.
The New Notes will be issued under the Indenture, which will be
qualified under the TIA upon the effectiveness of the Registration Statement of
which this Prospectus is a part. The Indenture authorizes the original
issuance of New Series A Notes in the aggregate principal amount of $5,000,000,
New Series B Notes in the aggregate principal amount of $26,500,000, New Series
C Notes in the aggregate principal amount of $36,000,000, New Series D Notes in
the aggregate principal amount of $32,000,000 and New Series E Notes in the
aggregate principal amount of $20,000,000. The terms of each series of New
Notes are substantially identical to the terms of the corresponding series of
Existing Notes that are to be exchanged therefor, except as described under
"Comparison of Existing Notes and New Notes" and except that the New Notes have
been registered under the Securities Act. The Existing Notes represent, and
the New Notes will represent, unsecured general obligations of the Company that
rank on a parity in right of payment to all existing and future unsecured and
unsubordinated indebtedness of the Company.
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries. A substantial portion of the consolidated
liabilities of the Company have been incurred by its subsidiaries. Therefore,
the Company's rights and the rights of its creditors, including holders of
Existing Notes and holders of New Notes, to participate in the distribution of
assets of any subsidiary upon the latter's liquidation or reorganization will
be subject to prior claims of the subsidiary's creditors, including trade
creditors, except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary (in which case the claims of the
Company would still be subject to the prior claims of any secured creditor of
such subsidiary and of any holder of indebtedness of such subsidiary that is
senior to that held by the Company). At March 31, 1994, the aggregate amount
of the outstanding debt of the Company's consolidated subsidiaries was
approximately $4.91 billion (including guaranties of indebtedness of others and
the unaccreted portion of indebtedness issued at a discount, but excluding
indebtedness owed to the Company). At that date, the Company's consolidated
subsidiaries had an aggregate of approximately $1.374 billion in undrawn lines
of credit.
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The Existing Notes are, and the New Notes will be, obligations
exclusively of the Company. The Company's ability to service its indebtedness,
including the Existing Notes and the New Notes, is dependent primarily upon the
earnings of its subsidiaries and the distribution or other payment of such
earnings to the Company in the form of dividends, loans or advances, payment or
reimbursement for management fees and expenses, and repayment of loans and
advances from the Company. The subsidiaries are separate and distinct legal
entities and have no obligation, contingent or otherwise, to pay any amounts
due pursuant to the Existing Notes or the New Notes or to make any funds
available therefor, whether by dividends, loans or other payments. The payment
of dividends or the making of loans and advances to the Company by its
subsidiaries may be subject to statutory or regulatory restrictions, are
contingent upon the earnings of those subsidiaries and are subject to various
business considerations. Further, certain of the Company's subsidiaries are
subject to loan agreements that prohibit or limit the transfer of funds by such
subsidiaries to the Company in the form of loans, advances or dividends and
require that such subsidiaries' indebtedness to the Company be subordinate to
the indebtedness under such loan agreements. The amount of net assets of
subsidiaries subject to such restrictions exceeds the Company's consolidated
net assets.
The terms of the New Notes include those stated in the Indenture and
those made part of the Indenture by reference to the TIA as in effect on the
date of the Indenture. The New Notes are subject to all such terms and holders
are referred to the Indenture and the TIA for a statement of such terms. See
"-- Additional Information". The following summary of certain provisions of
the Indenture does not purport to be complete and is subject to, and qualified
in its entirety by reference to, all provisions of the Indenture and those
terms made a part of the Indenture by reference to the TIA, including the
definitions therein of certain terms. As used in this section "Description of
the New Notes", unless the context indicates otherwise, the term "Company"
means Tele-Communications, Inc. and does not include any of its subsidiaries.
The definitions of certain capitalized terms used in this section are set forth
below under "-- Certain Definitions".
INTEREST
The New Notes of each series will bear interest at the interest rate
shown for such series on the cover page of this Prospectus. Interest will be
payable semiannually on June 15 and December 15 of each year in the case of the
New Series A Notes, on January 31 and July 31 of each year in the case of the
New Series B Notes and New Series C Notes, and on March 30 and September 30 of
each year in the case of the New Series D Notes and New Series E Notes (each
such date being an "Interest Payment Date" for New Notes of the applicable
series). Interest (except defaulted interest) payable with respect to a New
Note on an Interest Payment Date will be paid to the person in whose name such
New Note (or one or more predecessor New Notes) is registered at the close of
business on the Regular Record Date for such Interest Payment Date, which will
be the first day of the month in which such Interest Payment Date falls in the
case of the New Series A Notes, and will be the fifteenth day of the month in
which such Interest Payment Date falls in the case of the New Series B Notes,
New Series C Notes, New Series D Notes and New Series E Notes. Interest on each
New Note will accrue from the last Interest Payment Date on which interest was
paid on the New Notes of such series or, if no interest has been paid, from
June 15, 1994 in the case of the New Series A Notes, January 31, 1994 in the
case of the New Series B Notes and New Series C Notes, and March 30, 1994 in the
case of the New Series D Notes and New Series E Notes (each such date being the
last interest payment date on which interest was paid on the corresponding
series of Existing Notes). Interest will also be payable on the Stated Maturity
Date, and on any Principal Payment Date, Optional Prepayment Date, Redemption
Date or Purchase Date on which a New Note is prepaid, redeemed or purchased
prior to the Stated Maturity Date, in whole or in part, on the amount of
principal then paid (the Stated Maturity Date and each such Principal Payment
Date, Optional Prepayment Date, Redemption Date or Purchase Date being referred
to as a "Maturity Date" with respect to the principal amount, premium, if any,
and interest payable on such date with respect to a New Note). Interest payable
on a Maturity Date (other than a Purchase Date that is after a record date for
an interest payment and on or prior to the related interest payment date) will
be payable to the person to whom principal is payable. (Paragraph 1 of the New
Notes)
If the Company defaults in a payment of interest on New Notes of any
series on any Interest Payment Date, it will pay the defaulted interest to the
persons who are holders of New Notes of such series at the close of business
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<PAGE> 28
on a subsequent special record date fixed by the Company. At least 15 days
prior to such special record date, the Company will mail to each holder of New
Notes of such series a notice that states the special record date, the payment
date and the amount of defaulted interest to be paid. The Company will notify
the Trustee of the amount of defaulted interest proposed to be paid on each New
Note of such series and the date of the proposed payment, and at the same time
the Company will deposit with the Paying Agent an amount of money equal to the
aggregate amount proposed to be paid in respect of such defaulted interest or
will make arrangements satisfactory to the Paying Agent for such deposit prior
to the date of the proposed payment. The Company may pay defaulted interest in
any other lawful manner. (Section 2.10)
To the extent permitted by applicable law, interest will be payable on
overdue interest, principal and premium, if any, on a New Note at a rate per
annum equal to the greater of (i) the rate per annum announced publicly from
time to time by The Bank of New York in New York, New York as its "prime rate"
and (ii) 2% in excess of the rate per annum shown for New Notes of such series
on the cover page of this Prospectus. (Section 4.02; Paragraph 1 of the New
Notes)
PRINCIPAL INSTALLMENTS
The principal amount of the New Notes of each series will be payable,
without premium, in consecutive annual installments in the amounts and on the
dates (each a "Principal Payment Date") set forth below with respect to the
applicable series of New Notes, and on the Stated Maturity Date for New Notes
of such series. In the event that a New Note is prepaid in part at the option
of the Company, however, the amount of principal so prepaid per $100,000 in
Original Principal Amount of such New Note will be applied to reduce pro rata
the amount of each Principal Installment thereafter due and payable in respect
of such New Note. (Paragraph 2 of the New Notes)
New Series A Notes. The New Series A Notes are payable in Principal
Installments of $20,000 per $100,000 in Original Principal Amount of a New
Series A Note on December 15 of each year, from and including December 15,
1997, to and including December 15, 2000, with the remaining balance payable on
the Stated Maturity Date of December 15, 2001.
New Series B Notes. The New Series B Notes are payable in Principal
Installments of $16,667 per $100,000 in Original Principal Amount of a New
Series B Note on July 31 of each year, from and including July 31, 1997, to and
including July 31, 2001, with the remaining balance payable on the Stated
Maturity Date of August 31, 2002.
New Series C Notes. The New Series C Notes are payable in Principal
Installments of $25,000 per $100,000 in Original Principal Amount of a New
Series C Note on July 31 of each year, from and including July 31, 1999, to and
including July 31, 2001, with the remaining balance payable on the Stated
Maturity Date of August 31, 2002.
New Series D Notes. The New Series D Notes are payable in Principal
Installments of $25,000 per $100,000 in Original Principal Amount of a New
Series D Note on September 30 of each year, from and including September 30,
1994, to and including September 30, 1996, with the remaining balance payable
on the Stated Maturity Date of September 30, 1997.
New Series E Notes. The New Series E Notes are payable in
Principal Installments of $10,000 per $100,000 in Original Principal Amount of
a New Series E Note on September 30, 1995, $12,500 per $100,000 in Original
Principal Amount of a New Series E Note on each of September 30, 1996 and
September 30, 1997, and $20,000 per $100,000 in Original Principal Amount of a
New Series E Note on each of September 30, 1998 and September 30, 1999, with
the remaining balance payable on the Stated Maturity Date of September 30,
2000.
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OPTIONAL PREPAYMENTS
Subject to the terms and conditions of the Indenture, the New Notes of
each series may be prepaid, at the option of the Company, in whole at any time
or in part from time to time, at a prepayment price equal to the unpaid
principal amount of the New Note (or portion thereof) to be prepaid, plus
accrued and unpaid interest on the unpaid principal amount so prepaid to the
date fixed for prepayment (the "Optional Prepayment Date"), plus a premium
equal to the excess, if any, of (i) the sum of the net present values of all
Principal Installments and installments of interest scheduled to be paid after
such Optional Prepayment Date with respect to the unpaid principal amount of
the New Note (or portion thereof) to be prepaid, discounted at the Basic
Discount Rate for the New Notes of such series over (ii) the unpaid principal
amount of the New Note (or portion thereof) to be so prepaid; provided that no
premium will be payable if the Optional Prepayment Date is on or after December
15, 1999 in the case of the New Series A Notes, February 1, 2000 in the case of
the New Series B Notes, February 1, 2001 in the case of the New Series C Notes,
September 30, 1996 in the case of the New Series D Notes, or September 30, 1999
in the case of the New Series E Notes. (Paragraph 6 of the New Notes) The
Basic Discount Rate for the New Notes of each series is the rate equal to the
Treasury Yield with respect to the New Notes of such series plus 0.5%.
In the event of any partial prepayment of the New Notes of a series,
the aggregate principal amount of such prepayment will be applied to the
partial prepayment of the outstanding New Notes of such series pro rata in
accordance with the respective unpaid principal amounts of such New Notes and
will be applied ratably to the unpaid principal amount per $100,000 in Original
Principal Amount of a New Note of such series, with the amount of such
prepayment per $100,000 in Original Principal Amount of a New Note being
rounded, if applicable, to the nearest $1.00. Subject to such rounding, the
aggregate principal amount of any partial prepayment of the New Notes of any
series must be in a minimum amount of $1,000,000 or an integral multiple of
$500,000 in excess thereof; provided, however, that when the Company is
required to make an optional prepayment with respect to two series of New Notes
as described below, then the foregoing minimum amount requirement will only
apply to the aggregate principal amount of the partial prepayment with respect
to the New Notes of one of such two series, and the aggregate principal amount
of the partial prepayment with respect to the other of such two series shall
be determined on the basis of the pro rata payment requirement described below.
(Section 3.01(d))
With respect to the New Series B Notes and the New Series C Notes, the
Indenture provides that no optional prepayment with respect to the New Series B
Notes may be made prior to February 1, 2000 unless the Company simultaneously
makes an optional prepayment with respect to the same percentage of the
aggregate unpaid principal amount of the outstanding New Series C Notes
(subject to rounding differences) and, subject to the following sentence, no
optional prepayment with respect to the New Series C Notes may be made prior to
February 1, 2001 unless simultaneously therewith the Company makes an optional
prepayment with respect to the same percentage of the aggregate unpaid
principal amount of the outstanding New Series B Notes (subject to rounding
differences). If the Company determines to make an optional prepayment with
respect to the New Series B Notes on an Optional Prepayment Date that is on or
after February 1, 2000 and on or prior to January 31, 2001, then the Indenture
requires the Company to offer to prepay in the aggregate the same percentage of
the aggregate unpaid principal amount of the outstanding New Series C Notes on
such Optional Prepayment Date as it has elected to prepay of the New Series B
Notes, at a prepayment price equal to the unpaid principal amount of the New
Series C Notes or portions thereof to be prepaid, plus accrued and unpaid
interest on the unpaid principal amount so prepaid to the Optional Prepayment
Date. Any holder of New Series C Notes that desires to accept the prepayment
offer must deliver written notice of such acceptance to the Paying Agent by the
close of business on the sixteenth day preceding the Optional Prepayment Date,
after which time the right to accept such offer will terminate. With respect
to each New Series C Note as to which the prepayment offer has been accepted,
the portion of the unpaid principal amount to be prepaid will be determined on
the same basis as if all holders of New Series C Notes had accepted the
prepayment offer and the aggregate amount that the Company offered to prepay
was applied to the prepayment of the New Series C Notes pro rata in accordance
with the respective unpaid principal amounts thereof. (Section 3.01(b)) The
Company will comply with any applicable requirements of Rule 14e-1 promulgated
under the Exchange Act and any
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applicable securities laws and regulations in connection with the performance of
its obligations with respect to any prepayment offer.
With respect to the New Series D Notes and the New Series E Notes, no
optional prepayment may be made with respect to either of such two series
unless simultaneously therewith the Company makes an optional prepayment with
respect to the same percentage of the aggregate unpaid principal amount of the
outstanding New Notes of the other of such two series (subject to rounding
differences). (Section 3.01(c))
Notice of the Company's election to make an optional prepayment with
respect to the New Notes of a series will be mailed at least 30 days but not
more than 60 days before the Optional Prepayment Date to each holder of New
Notes of such series at such holder's registered address. (Section 3.03)
OPTIONAL REDEMPTION OF NON-CONSENTING NOTES
The Company may redeem, at its option, all but not less than all of
the New Notes of all holders that have not consented to a Prohibited Act if the
Company has not received the consent to such Prohibited Act of a
Majority-in-Interest of Holders within 30 days after the Company's written
request therefor, provided that (1) such Prohibited Act is undertaken in good
faith for a bona fide business reason and not primarily to avoid the
requirements applicable to a prepayment at the option of the Company, and (2)
at the time notice of redemption is given, (a) the Company has sufficient funds
available to it to pay the aggregate redemption price payable on the date fixed
for redemption (the "Redemption Date"), and (b) immediately before and after
giving effect to the redemption of the Non-Consenting Notes and after giving
effect to such Prohibited Act, the Company would be permitted to incur at least
$1.00 of additional Funded Debt pursuant to clause (2) of the covenant
described under "-- Certain Covenants -- Indebtedness" and no Event of Default
or Default exists or would then be continuing. (Section 3.02(a); Paragraph
7(a) of the New Notes)
If at any time on or after December 1, 1999, the Company has requested
in writing the consent of the holders of New Notes to Increased Debt Capacity
and has not received the consent of a Majority-in-Interest of Holders within 30
days thereafter, the Company may redeem, at its option, all but not less than
all of the New Notes of all holders that have not consented to the Increased
Debt Capacity, provided that at the time any notice of redemption is given, (1)
the Company has sufficient funds available to it to pay the aggregate
redemption price payable on the Redemption Date, and (2) immediately before and
after giving effect to the redemption of the Non-Consenting Notes and after
giving effect to such Increased Debt Capacity, the Company would be permitted
to incur at least $1.00 of additional Funded Debt pursuant to clause (2) of the
covenant described under "-- Certain Covenants -- Indebtedness" and no Event of
Default or Default exists or would then be continuing. (Section 3.02(b);
Paragraph 7(b) of the New Series A Notes, New Series B Notes, New Series C
Notes and New Series E Notes)
The redemption price for each Non-Consenting Note to be redeemed at the
option of the Company will be an amount equal to the unpaid principal amount of
such Non-Consenting Note, plus accrued and unpaid interest thereon to the
Redemption Date, plus a premium equal to the excess, if any, of (i) the sum of
the net present values of all Principal Installments and installments of
interest scheduled to be paid after such Redemption Date with respect to the
unpaid principal amount of such Non-Consenting Note, discounted at the Optional
Redemption Discount Rate for New Notes of such series over (ii) the unpaid
principal amount of such Non-Consenting Note; provided that, with respect to an
optional redemption of Non-Consenting Notes with respect to Increased Debt
Capacity, no premium will be payable if the Redemption Date is on or after
December 15, 2000 in the case of the New Series A Notes, August 31, 2001 in the
case of the New Series B Notes and New Series C Notes, September 30, 1996 in the
case of the New Series D Notes, or September 30, 1999 in the case of the New
Series E Notes. (Paragraph 7 of the New Notes) The Optional Redemption Discount
Rate for the New Notes of each series is the rate equal to the Treasury Yield
with respect to the New Notes of such series plus 1%.
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The Redemption Date for an optional redemption of Non-Consenting Notes
will be not less than 30 days nor more than 60 days after the date of the
Company's written request for the consent of holders of New Notes to the
Prohibited Act or Increased Debt Capacity, and notice of the Company's election
to redeem the Non-Consenting Notes, if not included in such written request for
consent, will be mailed at least 15 days before the Redemption Date to each
holder of New Notes to be redeemed at such holder's registered address.
CHANGE OF CONTROL
With respect to the New Notes of any series, if both (i) a Change of
Control of the Company shall occur at any time after the date on which New Notes
of such series are first issued and on or prior to the Stated Maturity Date of
the New Notes of such series and (ii) on any date during the period commencing
90 days before and ending 90 days after a public filing has been made with the
Commission or other general public disclosure has been made indicating the
occurrence of such Change of Control, the then current rating of the New Notes
of such series by Duff & Phelps Credit Rating Co. or its successor ("D&P") or by
Moody's Investors Service, Inc. or its successor ("Moody's") is downgraded to
lower than BBB-, in the case of D&P (or an equivalent successor rating), or
lower than Baa3, in the case of Moody's (or an equivalent successor rating) and,
in the event that such downgrading shall have occurred during the 90-day period
prior to such public disclosure, the rating assigned to such series of New Notes
by D&P or Moody's as of the close of business on the date of such public
disclosure remains lower than BBB-or lower than Baa3, respectively (the
occurrence of the conditions specified in both (i) and (ii) above being a "Put
Event"), then each holder of New Notes of such series shall have the right to
require the Company to repurchase all or any portion (such portion to be
$100,000 in Original Principal Amount or an integral multiple thereof) of such
holder's New Notes of such series at a purchase price equal to 100% of the
unpaid principal amount of such New Note (or such portion), plus accrued and
unpaid interest on the unpaid principal amount of such New Note (or such
portion) to the date fixed for purchase pursuant to the Indenture (the "Purchase
Date"), all as provided in, and subject to the terms of, the Indenture. Within
15 days following the occurrence of a Put Event, the Company will give a notice
to each holder of New Notes of such series setting forth, among other things,
details regarding the right of such holder to require the Company to repurchase
such holder's New Notes of such series, the Purchase Date, and the name and
address of the Paying Agent (which for this purpose will be the Trustee) to
which such New Notes are to be presented and surrendered. The Purchase Date
will be the 90th day following the date on which such notice is mailed by the
Company to holders of New Notes of such series at their registered addresses.
Any holder intending to exercise its right to put its New Notes of such series
to the Company must deliver written notice of such intention to the Paying
Agent, and concurrently present and surrender to the Paying Agent the New Notes
to be purchased, by the close of business on the fifteenth day preceding the
Purchase Date, after which time the right of holders of New Notes of such series
to require the Company to purchase the same shall terminate. The Company will
not be obligated, with respect to the New Notes of any series, to purchase such
New Notes or give notice to the holders thereof with respect to more than one
Put Event. (Section 3.08) The applicability of this provision of the New Notes
is limited to the circumstances described above and this provision is not
designed to, and may not, provide rights to the holders of New Notes in all
circumstances in which the market value of the New Notes held by them may be
adversely affected, whether as the result of the Company's engaging in a highly
leveraged transaction or otherwise. This provision would not apply to the
acquisition of beneficial ownership of shares of the Company's common stock by a
Controlling Person or by any other person if and for so long as the shares of
the Company's common stock beneficially owned by the Controlling Persons
represent in the aggregate thirty percent (30%) or more of the combined voting
power of all shares of the Company's common stock calculated on a fully diluted
basis. The term "Controlling Person" includes each of the Company's Chairman of
the Board, its President and each director of the Company as of the date of the
Indenture, their respective family members, estates and heirs, Kearns-Tribune
Corporation and the trustee under the Company's Employee Stock Purchase Plan.
See "-- Certain Definitions." The proposed TCI/Liberty Combination, if
consummated, will not result in a Change of Control of the Company. See "Recent
Developments".
The Company's payment obligations with respect to the New Notes,
including its obligation to pay the purchase price of New Note the holder of
which has elected to require the Company to repurchase such New Note following
the occurrence of a Put Event, are unsecured, unsubordinated obligations of the
Company and rank on a
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parity in right of payment with other unsecured, unsubordinated indebtedness of
the Company. Approximately $5.328 billion of the Company's outstanding
indebtedness at March 31, 1994 (excluding for this purpose the Existing Notes)
include provisions that would permit the holders to require the Company to
repurchase or repay such indebtedness upon the occurrence of a Put Event, a
Change of Control of the Company or events similar thereto, which obligation of
the Company would rank on a parity with its repurchase obligation with respect
to the New Notes. In addition, approximately $4.164 billion of the outstanding
indebtedness of the Company's subsidiaries include provisions that would require
the applicable subsidiary to repurchase or repay such indebtedness upon a Change
of Control of the Company or events similar thereto. The Company anticipates
that it and its subsidiaries will continue to issue indebtedness with similar
covenants in the future. If a Put Event were to occur, there can be no
assurance that the Company would have sufficient funds to satisfy its repurchase
obligations with respect to the New Notes and such other indebtedness. The
failure of the Company to repurchase a New Note which the holder has elected to
require it to repurchase following the occurrence of a Put Event would
constitute an Event of Default with respect to such New Notes and may cause the
acceleration of the maturity of other indebtedness of the Company after notice
and/or passage of time.
No amendment, supplement or waiver may be made to the Indenture or to
the New Notes of any series which would materially adversely affect the rights
of any holder of New Notes to require the Company to purchase such New Notes
upon the occurrence of a Put Event without the consent of the holder of each
outstanding New Note of the series affected thereby.
The Company will comply with any applicable requirements of Rule 14e-1
promulgated under the Exchange Act and any applicable securities laws and
regulations in connection with the performance of its obligations with respect
to any Put Event.
METHOD OF PAYMENT
Payment of the principal, premium, if any, and interest on the New
Notes will be made in money of the United States of America that at the time of
payment is legal tender for the payment of public and private debts and may be
made by check payable in such money, to the holders thereof upon presentation
of such New Notes at the office of the Paying Agent; provided, however, that
payment of principal and interest payable on a Principal Payment Date or an
Interest Payment Date (other than the Stated Maturity Date) without
presentation of the New Note (i) may be made by check mailed to a holder's
registered address or (ii) upon receipt by the Paying Agent of appropriate
instructions in writing from the holder thereof (provided such holder is the
holder of New Notes with an aggregate unpaid principal amount of $1,000,000 or
more having the same Principal Payment Date or Interest Payment Date, as
applicable), not less than 16 days prior to such Principal Payment Date or
Interest Payment Date, shall be made by wire transfer of immediately available
funds to such account at a bank in The City of New York, New York (or other
bank consented to by the Company and the Paying Agent) as the holder shall have
designated in such instructions so long as such bank has appropriate facilities
therefor. Except as provided above, a holder must surrender its New Note to a
Paying Agent to collect principal, premium, if any, and interest payable on a
Maturity Date. Provided such presentation and surrender is made on a Maturity
Date (other than a Principal Payment Date) by a holder of New Notes to be paid,
prepaid, redeemed or purchased on such Maturity Date in an aggregate unpaid
principal amount of $1,000,000 or more (determined before giving effect to the
principal payment to be made on such Maturity Date), payment of the principal,
premium, if any, and interest payable on such Maturity Date with respect to
such New Note shall be made by wire transfer of immediately available funds to
such account at a bank in The City of New York, New York (or other bank
consented to by the Company and the Paying Agent) as the holder shall have
designated, provided that such bank has appropriate facilities therefor and
that appropriate wire transfer instructions in writing have been received by
the Paying Agent not less than 16 days prior to such Maturity Date. If a
Maturity Date or an Interest Payment Date falls on a day that is not a Business
Day, the related payment of principal, premium, if any, or interest payable
with respect to such Maturity Date or Interest Payment Date shall be paid on
the next succeeding Business Day, and no interest will accrue on the amount so
payable for the period on and after such Maturity Date or Interest Payment
Date, as the case may be. (Paragraph 3 of the New Notes)
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CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Designation of Restricted Subsidiaries. The Company may at any time
designate an Unrestricted Subsidiary as a Restricted Subsidiary or designate a
Restricted Subsidiary as an Unrestricted Subsidiary, provided that (1) no Event
of Default or Default shall exist immediately before or after such designation,
(2) on a pro forma basis at the time of such designation, the Company would be
permitted to incur at least $1.00 of additional Funded Debt pursuant to clause
(2) of the "Indebtedness" covenant below, (3) such designation shall not render
the Company and its Restricted Subsidiaries insolvent or generally unable to
pay its or their respective debts as they become due, and (4) an Officers'
Certificate with respect to such designation is delivered to the Trustee within
75 days after the end of the fiscal quarter of the Company in which such
designation is made (or, in the case of a designation made during the last
fiscal quarter of any fiscal year of the Company, within 120 days after the end
of such fiscal year), which Officers' Certificate shall state the effective
date of such designation. The Company shall make the initial designation of
Restricted Subsidiaries with respect to the New Notes, and deliver the
required Officers' Certificate to the Trustee, on or prior to the date of
initial issuance of New Notes of each series. (Section 4.03)
Debt Service Test. The Company will not permit the Annualized Cash
Flow of the Company and its Restricted Subsidiaries for any fiscal quarter of
the Company to be less than 110% of Consolidated Debt Service of the Company
and its Restricted Subsidiaries (computed on a pro forma basis) for the four
fiscal quarters immediately succeeding the end of such fiscal quarter.
(Section 4.07)
Restricted Payments. Neither the Company nor any Restricted
Subsidiary may (i) pay or declare any dividend on any class of its capital
stock (other than dividends payable solely in capital stock of the Company or
warrants, rights or options to acquire capital stock of the Company) or make
any other distribution on account of any class of its capital stock, (ii)
retire, redeem, purchase or otherwise acquire, directly or indirectly, any
shares of any class of its capital stock or any warrants, rights or options to
acquire any such shares, or (iii) make or provide for any mandatory sinking
fund payments required in connection with any class of its capital stock (all
of the foregoing being "Restricted Payments"), except that (1) any Restricted
Subsidiary may make Restricted Payments to the Company or another Restricted
Subsidiary in respect of cash and other forms of dividends and distributions on
account of any series or class of its capital stock, (2) the Company or any
Restricted Subsidiary may make cash dividends on Money Market Preferred Stock
included within the definition of Funded Debt, and (3) the Company or any
Restricted Subsidiary may make any other Restricted Payment, provided that in
each case permitted under this clause (3), (a) immediately before and after
giving effect to such Restricted Payment, no Event of Default or Default exists
or would then be continuing, and (b) immediately before and after giving effect
to such transaction, the Company would be permitted to incur at least $1.00 of
additional Funded Debt pursuant to clause (2) of the "Indebtedness" covenant.
Neither the Company nor any Restricted Subsidiary may (i) make any payment of
principal, interest or premium, if any, in respect of Subordinated Debt if (x)
immediately before or after giving effect to such payment an Event of Default
or Default exists and is continuing, or (B) a Put Event shall have occurred
(other than a Put Event with respect to which all time periods for the purchase
of New Notes to be purchased at the option of the holders have fully expired),
provided, however, that the Company may make regularly scheduled payments with
respect to Approved Subordinated Debt in accordance with its terms as in effect
on the date of the Indenture (but subject to the subordination terms thereof);
or (ii) make any voluntary purchase, redemption, retirement or prepayment of
principal, interest or premium, if any, in respect of Approved Subordinated
Debt if immediately before or after giving effect to such purchase, redemption,
retirement or prepayment, as the case may be, an Event of Default or Default
exists and is continuing. As of December 31, 1993, the aggregate outstanding
principal amount of the Approved Subordinated Debt was $441,000.
Loan and Investment Limitations. Neither the Company nor any
Restricted Subsidiary may make or permit to remain outstanding any loan or
advance to, or provide any Guaranty (or enter into any contract or agreement
which is substantially equivalent in economic effect to a Guaranty) of the
obligations of, or own, purchase or acquire
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any stock, obligation or securities of, or any other interest in, or make any
capital contribution to, any person (each an "Investment"), except (1)
endorsements of negotiable instruments for collection in the ordinary course;
(2) Investments in the Company by a Restricted Subsidiary or Investments by the
Company or any Restricted Subsidiary in any Restricted Subsidiary (except that
an Investment in a less than Wholly-owned Restricted Subsidiary will be deemed a
Restricted Payment subject to the "Restricted Payments" covenant to the extent
that the Investment increases the capitalization of the Restricted Subsidiary
and the Company or Restricted Subsidiary making the Investment does not receive
an equity interest or other economic equivalent attributable to such
Investment); (3) existing Investments listed on an Exhibit to the Indenture; (4)
Investments in commercial paper rated in the highest category of ratings by
Standard & Poor's Corporation or Moody's; (5) Investments in certificates of
deposit with maturities of less than 12 months issued by certain commercial
banks; (6) Investments in obligations of or guaranteed by the United States
Government or any agency thereof having a term of less than one year; (7)
certain Investments in Unrestricted Subsidiaries in connection with the
Company's normal cash management practices; (8) other Investments, provided that
(a) such Investment is without recourse (other than to the extent permitted
in clause (9) below), (b) no Event of Default or Default exists immediately
before or after giving effect to such Investment, (c) on a pro forma basis
immediately upon making such Investment, the Company would be permitted to
incur at least $1.00 of additional Funded Debt under clause (2) of the
"Indebtedness" covenant, and (d) such Investment will not render the Company and
its Restricted Subsidiaries insolvent or unable to pay its or their respective
debts as they become due; and (9) any Guaranty, provided that (a) the maximum
aggregate amount of liability under such Guaranty and all Guaranties then
outstanding does not exceed 10% of the maximum aggregate amount of Short-Term
Debt and Funded Debt which the Company and its Restricted Subsidiaries would
then be permitted to incur under clause (2) of the "Indebtedness" covenant, (b)
the amount of the liability under such Guaranty can be readily identified and
shall be expressly subject to a specified limit, (c) the maximum amount of the
liability under such Guaranties will be deemed Short-Term Debt or Funded Debt
for all purposes under the Indenture, (d) the Company or the Restricted
Subsidiary could incur the Short-Term Debt or Funded Debt evidenced by such
Guaranty under clause (2) of the "Indebtedness" covenant, (e) immediately upon
incurring such Guaranty, the Company or the Restricted Subsidiary would be
permitted to incur at least $1.00 of additional Funded Debt pursuant to clause
(2) of the "Indebtedness" covenant, and (f) no Event of Default or Default
exists immediately before or after giving effect to the transaction. A Guaranty
that was permitted to be incurred pursuant to clause (9) above at the time of
incurrence may remain outstanding notwithstanding that it would not be
permitted to be incurred thereafter. (Section 4.09)
Liens. Neither the Company nor any Restricted Subsidiary may create,
assume or suffer to exist any Lien upon any of their respective properties or
assets, real, personal or mixed, tangible or intangible, whether now owned or
hereafter acquired, except (1) Liens upon property of a Restricted Subsidiary
in favor of and securing Indebtedness owing to the Company or another
Restricted Subsidiary; (2) certain specified statutory and good faith deposits
and similar Liens; (3) Liens imposed by law or for taxes, assessments or other
governmental charges or levies if the obligation secured thereby is not yet due
or subject to penalties for non-payment, or the validity or amount of which is
being contested by appropriate legal proceedings and with respect to which
adequate reserves have been established in accordance with generally accepted
accounting principles, and Liens arising out of a judgment or award with
respect to which the Company or Restricted Subsidiary is prosecuting an appeal
or proceedings for review and with respect to which it shall have secured a
stay of execution pending such appeal or proceedings, or with respect to which
it shall have posted a bond and established adequate reserves in accordance
with generally accepted accounting principles for the payment of such judgment
or award; (4) purchase money Liens upon any real property or equipment or
interest therein, provided that (a) the outstanding principal amount of the
Short-Term Debt or Funded Debt secured by such Lien does not at any time exceed
100% of the lesser of (i) the purchase price paid for the real property,
equipment or interest therein which is encumbered by such Lien or (ii) the fair
market value at the time of purchase of such real property or equipment or
interest therein, (b) such Lien does not encumber any other asset owned by the
Company or any Restricted Subsidiary, (c) the Short-Term Debt or Funded Debt
secured by such Lien is permitted under clause (2) of the "Indebtedness"
covenant, and (d) no Event of Default or Default exists immediately before or
after giving effect to such transaction; (5) existing Liens listed on an
Exhibit to the Indenture; (6) a pledge by the Company or a Restricted
Subsidiary of its interest in any shares of any class of stock or other
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security of any Unrestricted Subsidiary, provided that the Indebtedness or
obligation secured by such Lien is without recourse to the Company or any
Restricted Subsidiary or any of its or their other property and assets, except
as would otherwise be permitted under this "Liens" covenant; and (7) a Lien not
otherwise permitted under this "Liens" covenant if the Company makes or causes
to be made effective provision whereby the then outstanding New Notes (together
with, if the Company shall so determine, any other Indebtedness ranking equally
with the New Notes, whether then existing or thereafter created) are secured
equally and ratably with (or prior to) the Indebtedness secured by such Lien
for so long as such Indebtedness is so secured, and the Company delivers to the
Trustee an officers' certificate with respect to compliance with this clause
(7) and an opinion of counsel as to the validity of the Lien so securing the
New Notes. (Section 4.10)
Indebtedness. Neither the Company nor any Restricted Subsidiary may
incur or assume any Short-Term Debt or Funded Debt, including any Guaranty,
except (1) the Indebtedness evidenced by the New Notes; (2) Short-Term Debt or
Funded Debt, provided that (a) after giving effect to such transaction, the
aggregate amount of Senior Debt then outstanding shall not exceed seven times
Annualized Cash Flow of the Company and its Restricted Subsidiaries for the most
recent three-month period ending the month immediately preceding such
transaction (after giving effect to the inclusion of Cash Flow derived from the
use of such Short-Term Debt or Funded Debt), (b) after giving effect to such
transaction, the aggregate amount of Total Debt then outstanding shall not (i)
at any time prior to December 1, 1999 exceed eight times Annualized Cash Flow of
the Company and its Restricted Subsidiaries for the most recent three-month
period ending the month immediately preceding such transaction (after giving
effect to the inclusion of Cash Flow derived from the use of such Short-Term
Debt or Funded Debt), and (ii) on or after December 1, 1999 exceed seven times
Annualized Cash Flow of the Company and its Restricted Subsidiaries for the
three-month period ending the month immediately preceding such transaction
(after giving effect to the inclusion of Cash Flow derived from the use of such
Short-Term Debt or Funded Debt), (c) immediately before and after giving effect
to such transaction no Default or Event or Default shall exist, and (d) if any
such Short-Term Debt or Funded Debt is secured by Liens, such Short-Term Debt or
Funded Debt is permitted under clause (3) below and if any such Short-Term Debt
or Funded Debt is Short-Term Debt or Funded Debt of a Restricted Subsidiary, it
is permitted under clause (4) below; (3) Short-Term Debt or Funded Debt secured
by purchase money Liens permitted under the "Liens" covenant, provided that (a)
such Short-Term Debt or Funded Debt is permitted under clause (2) above, and
immediately after incurring or assuming such Short-Term Debt or Funded Debt, the
sum of the aggregate outstanding principal amount of all Short-Term Debt and
Funded Debt of the Company and the Restricted Subsidiaries secured by Liens plus
the aggregate outstanding principal amount of all Short-Term Debt and Funded
Debt of all Restricted Subsidiaries (excluding amounts otherwise included as
secured Short-Term Debt or Funded Debt of the Company and the Restricted
Subsidiaries) shall not exceed 15% of the maximum aggregate amount of all
Short-Term Debt and Funded Debt which the Company and its Restricted
Subsidiaries would then be permitted to incur pursuant to clause (2) above, and
(b) immediately before and after giving effect to such transaction no Event of
Default or Default shall exist; and (4) Short-Term Debt or Funded Debt incurred
or assumed by a Restricted Subsidiary (including outstanding Funded Debt of any
Unrestricted Subsidiary at the time it is designated a Restricted Subsidiary),
provided that (a) such Short-Term Debt or Funded Debt is permitted under clause
(2) above, and immediately after incurring or assuming such Short-Term Debt or
Funded Debt, the sum of the aggregate outstanding principal amount of all
Short-Term Debt and Funded Debt of all Restricted Subsidiaries plus the
aggregate outstanding principal amount of all Short-Term Debt and Funded Debt of
the Company and the Restricted Subsidiaries secured by purchase money Liens
permitted under the "Liens" covenant (excluding amounts otherwise included as
Short-Term Debt or Funded Debt of any Restricted Subsidiary) shall not exceed
15% of the maximum aggregate amount of all Short-Term Debt and Funded Debt which
the Company and its Restricted Subsidiaries would then be permitted to incur
pursuant to clause (2) above, and (b) immediately before and after giving effect
to such transaction no Event of Default or Default shall exist. (Section 4.11)
Indebtedness to Unrestricted Subsidiaries. Neither the Company nor
any Restricted Subsidiary may make any payment (including prepayments and
purchases) in respect of Indebtedness for borrowed money owing to and held by
an Unrestricted Subsidiary or a Restricted Subsidiary which is not a
Wholly-owned Restricted Subsidiary if, immediately before or after giving
effect to such payment, (x) an Event of Default or a Default shall have
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occurred and be continuing, (y) on a pro forma basis, and after giving
immediate effect to such transaction, the Company would not be permitted to
incur at least $1.00 of additional Funded Debt under clause (2) of the
"Indebtedness" covenant, or (z) a Put Event shall have occurred (other than a
Put Event with respect to which all time periods for the purchase of New Notes
to be purchased at the option of the holders have expired), provided, however,
that the Company may reimburse the Subsidiaries for expenditures made in the
day-to-day operations of the Subsidiaries pursuant to the Company's normal cash
management practices. (Section 4.12)
Mergers and Acquisitions. Neither the Company nor any Restricted
Subsidiary may merge or consolidate with or acquire the stock or assets of any
person, except that: (1) the Company may consolidate with or merge into any
person, provided that (a) the person formed by such consolidation or into which
the Company is merged shall be a corporation organized and existing under the
laws of the United States, any State thereof or the District of Columbia and
shall expressly assume, by supplemental indenture, all the obligations of the
Company under the New Notes and the Indenture, (b) on a pro forma basis, and
after giving immediate effect to such transaction, no Event of Default or
Default shall exist, and (c) on a pro forma basis, and after giving immediate
effect to such transaction, such successor corporation would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to clause (2) of the
"Indebtedness" covenant; (2) the Company or a Restricted Subsidiary may merge
with, or acquire all or substantially all of the stock or assets of, any person
other than a Restricted Subsidiary, in a transaction in which the Company or the
Restricted Subsidiary shall be the surviving or continuing corporation, provided
that (i) the Company or the Restricted Subsidiary shall assume all outstanding
Indebtedness of the non-surviving or acquired person with respect to which the
Company or the Restricted Subsidiary could be held legally liable, or which
could be satisfied from any assets of the Company or the Restricted Subsidiary
and such Indebtedness would then be permitted as additional Funded Debt under
clause (2) of the "Indebtedness" covenant, (ii) on a pro forma basis, and after
giving immediate effect to such transaction, such transaction would not result
in a violation of the "Limitation on Other Business" covenant, (iii) on a pro
forma basis, and after giving immediate effect to such transaction and the
incurrence or assumption of such Indebtedness, no Event of Default or Default
shall exist, and (iv) on a pro forma basis, and after giving immediate effect to
such transaction, the Company would be permitted to incur at least $1.00 of
additional Funded Debt pursuant to clause (2) of the "Indebtedness" covenant;
(3) (A) a Restricted Subsidiary may merge into the Company and may merge into or
consolidate with another Restricted Subsidiary, (B) a Restricted Subsidiary may
sell, lease or otherwise dispose of all or substantially all of its assets to,
the Company or another Restricted Subsidiary, and (C) the Company or any
Restricted Subsidiary may acquire the stock or assets of any other Restricted
Subsidiary, provided, however, that the Company may not merge with, a Restricted
Subsidiary may not merge into or consolidate with, and neither the Company or a
Restricted Subsidiary may purchase or otherwise acquire all or substantially all
of the stock or assets of a Restricted Subsidiary, other than a Wholly-owned
Restricted Subsidiary, unless any Indebtedness or other obligation to purchase
or otherwise provide compensation for all or any part of the stock or assets of,
or any interest in, such other Restricted Subsidiary not then owned by the
Company or the Restricted Subsidiary surviving such merger or consolidation or
making such acquisition, as the case may be, incurred or to be incurred in
connection with such transaction would then be permitted as additional Funded
Debt under clause (2) of the "Indebtedness" covenant; (4) the Company or a
Restricted Subsidiary may, in the ordinary course of its business, acquire
assets of any person, other than assets which constitute all or any substantial
part of the assets of such person; and (5) the Company or a Restricted
Subsidiary may make acquisitions of the stock or assets of any person permitted
under the "Loan and Investment Limitations" covenant. (Section 4.13)
Sale of Assets. Neither the Company nor any Restricted Subsidiary may
sell, lease, transfer or otherwise dispose of any of its properties and assets
(including pursuant to an order, judgment or decree requiring the divestiture of
assets) outside of the normal course of business as conducted as of the date of
the Indenture, except that the Company or a Restricted Subsidiary may sell,
lease, transfer or otherwise dispose of less than substantially all of its
assets to any person other than a Restricted Subsidiary, provided that in each
such case (i) the Company or such Restricted Subsidiary receives consideration
which represents the fair market value of such assets at the time of such sale
or disposition, (ii) any such sale or disposition shall be on a non-recourse
basis (except as permitted under clause (9) of the "Loan and Investment
Limitations" covenant), (iii) no Event of Default or Default shall have occurred
and be continuing either before or after the consummation of such transaction,
and (iv) after giving effect
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to such transaction, the Company would be permitted to incur at least $1.00 of
additional Funded Debt pursuant to clause (2) of the "Indebtedness" covenant,
and provided, further that: (1) In the case of a sale or disposition of an
asset or group of assets (other than as provided in clauses (2) or (3) below),
the following conditions are satisfied: (A) during the twelve-month period
ending the month immediately preceding the month in which the proposed sale or
disposition occurs, the sum of the Annualized Cash Flow attributable to the
assets to be sold or disposed of by the Company or any Restricted Subsidiary for
the three-month period ending the month immediately preceding the month in which
such sale or disposition would occur, plus the Annualized Cash Flow attributable
to all other assets sold or disposed of by the Company or any Restricted
Subsidiary during such twelve-month period for the three-month period ending the
month immediately preceding the month in which the respective sales or
dispositions occurred, does not exceed 15% of the Annualized Cash Flow of the
Company and its Restricted Subsidiaries for the three-month period ending the
month immediately preceding the month in which the proposed sale or disposition
occurs, including the Annualized Cash Flow for the same three-month period
related to any Unrestricted Subsidiary or to any Subsidiary which is acquired by
the Company or a Restricted Subsidiary which in each case is designated to be a
Restricted Subsidiary during the same calendar month as the proposed sale or
disposition; and (B) on a cumulative basis in respect of all assets sold or
disposed of by the Company or any Restricted Subsidiary during the five-year
period ending the month immediately preceding the month in which any proposed
sale or disposition would occur, the sum of the Annualized Cash Flow
attributable to each such asset so sold or disposed of for the three-month
period ending the month immediately preceding the month in which such asset was
so sold or disposed of does not, in the aggregate, exceed 40% of the Annualized
Cash Flow of the Company and its Restricted Subsidiaries for the three-month
period ending the month immediately preceding the month in which the proposed
sale or disposition would occur, including the Annualized Cash Flow for the same
three-month period related to any Unrestricted Subsidiary or to any Subsidiary
which is acquired by the Company or a Restricted Subsidiary which in each case
is designated to be a Restricted Subsidiary during the same calendar month as
the proposed sale or disposition; or (2) In the case of a trade or exchange of
an asset or group of assets, the following conditions are satisfied: (A) the
assets received by the Company or the Restricted Subsidiary are free of any
Liens except as permitted under the "Liens" covenant; (B) during the
twelve-month period ending the month immediately preceding the month in which
the proposed exchange transaction occurs, the sum of the Annualized Cash Flow
attributable to the assets to be exchanged by the Company or any Restricted
Subsidiary for the three- month period ending the month immediately preceding
the month in which such exchange transaction would occur, plus the Annualized
Cash Flow attributable to all other assets exchanged by the Company or any
Restricted Subsidiary during such twelve-month period for the three-month period
ending the month immediately preceding the month in which the respective
exchange transactions occurred, does not exceed 15% of the Annualized Cash Flow
of the Company and its Restricted Subsidiaries for the three-month period ending
the month immediately preceding the month in which the proposed exchange
transaction occurs, including the Annualized Cash Flow for the same three-month
period related to any Unrestricted Subsidiary or to any Subsidiary which is
acquired by the Company or a Restricted Subsidiary which in each case is
designated to be a Restricted Subsidiary during the same calendar month as the
proposed exchange transaction; (C) on a cumulative basis in respect of all
assets exchanged by the Company or any Restricted Subsidiary during the
five-year period ending the month immediately preceding the month in which any
proposed exchange transaction would occur, the sum of the Annualized Cash Flow
attributable to each such asset so traded or exchanged for the three-month
period ending the month immediately preceding the month in which such asset was
so traded or exchanged does not, in the aggregate, exceed 40% of the Annualized
Cash Flow of the Company and its Restricted Subsidiaries for the three-month
period ending the month immediately preceding the month in which the proposed
exchange transaction would occur, including the Annualized Cash Flow for the
same three- month period related to any Unrestricted Subsidiary or to any
Subsidiary which is acquired by the Company or a Restricted Subsidiary which in
each case is designated to be a Restricted Subsidiary during the same calendar
month as the proposed exchange transaction; (D) such transaction shall not
render the Company and its Restricted Subsidiaries insolvent or generally unable
to pay its or their respective debts as they become due; (E) the Company
notifies the Trustee of such trade or exchange; and (F) in the case of a trade
or exchange of an asset or group of assets, in one transaction or a series of
related transactions, in which the sum of the Annualized Cash Flows attributable
to the assets traded or exchanged by the Company or any Restricted Subsidiary
for the three-month period ending the month immediately preceding the month in
which such exchange transaction (or, if a series of transactions, the last
transaction) would occur exceeds 5% of
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the Annualized Cash Flow of the Company and its Restricted Subsidiaries for such
three- month period, the assets received by the Company or the Restricted
Subsidiary in such exchange transaction shall be assets used in the CATV
Business; or (3) In the case of the sale or other disposition of any shares of
stock, any Indebtedness or any security of a Restricted Subsidiary, the
following conditions are satisfied: (A) all shares of stock, all Indebtedness
and all securities of such Restricted Subsidiary at the time owned by the
Company or by any other Restricted Subsidiary are sold or otherwise disposed of
to a person other than the Company or any Restricted Subsidiary; (B) immediately
after each such sale or other disposition, such Restricted Subsidiary shall not
own, directly or indirectly, any shares of stock, any Indebtedness or any
security of the Company or of any other Restricted Subsidiary; and (C) such sale
or other disposition would then be permitted under clause (1) or (2) above, as
the case may be. Nothing contained in the "Sale of Assets" covenant prohibits
the sale, transfer or other disposition by the Company or any Restricted
Subsidiary of all or any part of the assets and property, or of any shares of
stock, any Indebtedness or any security, of any Unrestricted Subsidiary,
provided that any such sale, transfer or disposition shall, in respect of any
Indebtedness or obligation related thereto, be without recourse to the Company
or any Restricted Subsidiary, or any of its or their other property and assets
except as would be permitted under the "Liens" covenant. Further, nothing
contained in the "Sale of Assets" covenant prohibits the making of any
Restricted Payment permitted by the "Restricted Payments" covenant or any
Investment permitted by the "Loan and Investment Limitations" covenant.
(Section 4.14)
Sale or Discount of Receivables. Neither the Company nor any
Restricted Subsidiary may sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
(Section 4.15)
Limitation on Other Business. The Company will not, during any
three-month period, permit less than 80% of the total Gross Revenues of the
Company and its Restricted Subsidiaries to be derived from the acquisition,
ownership, expansion, operation and maintenance of a CATV Business. (Section
4.16)
ERISA. Neither the Company nor any Restricted Subsidiary may: (a)
terminate or withdraw from any Plan so as to result in any material liability
to the Pension Benefit Guaranty Corporation; (b) engage in or permit any person
to engage in any Prohibited Transaction involving any Plan which would subject
the Company to any material tax, penalty or other liability; (c) incur or
suffer to exist any material funding deficiency described in Section 302 of
ERISA, whether or not waived, involving any Plan; or (d) allow or suffer to
exist any event or condition which presents a material risk of incurring a
material liability to the Pension Benefit Guaranty Corporation. For the
purpose of this covenant only, a tax, penalty or other liability shall be
considered material if it is in excess of 5% of consolidated net earnings of
the Company and its Restricted Subsidiaries and such tax, penalty or other
liability is not covered in full by insurance. (Section 4.17)
Consolidated Tax Returns. The Company will not file, or consent to the
filing of, any consolidated income tax return with any person other than a
subsidiary, unless the Company shall become a subsidiary of, or controlled by or
under common control with, or is merged into or consolidated with any person,
including, without limitation, any Affiliate, in which event the Company shall
be liable for and pay no more tax than would be payable by the Company if the
Company were not a subsidiary of, or under the control of or under common
control with, or had not been merged into or consolidated with, such person.
(Section 4.18)
Disposition of Stock and Indebtedness of Restricted Subsidiaries.
Neither the Company nor any Restricted Subsidiary may sell or otherwise dispose
of any shares of stock or any Indebtedness of a Restricted Subsidiary, except
(1) to the Company or to a Restricted Subsidiary, and (2) as permitted under
the "Restricted Payments", "Mergers and Acquisitions" and "Sale of Assets"
covenants. (Section 4.19)
Transactions With Affiliates. Neither the Company nor any Restricted
Subsidiary may (a) make any loan or advance or otherwise extend credit to any
of their respective Affiliates, or (b) enter into any other transaction with
any of their respective Affiliates, if the terms and conditions of such loan,
advance, extension of credit or other
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transaction are, at the time of the making or entering into of any thereof, less
favorable to the Company or such Restricted Subsidiary in any material respect
than the terms and conditions which would apply in a similar transaction with a
person other than such Affiliate, provided, however, that this covenant shall
not apply to (i) loans or advances made by the Company or any Restricted
Subsidiary to an Unrestricted Subsidiary which are permitted to be incurred
under the "Loan and Investment Limitations" covenant, (ii) management services
rendered by the Company or any Restricted Subsidiary in the ordinary course of
business to cable television systems of Affiliates for which services the
Company or such Restricted Subsidiary is fully and fairly compensated on a
current basis by such Affiliate, (iii) any transaction involving the Company and
one or more Restricted Subsidiaries, exclusively, (iv) any transaction involving
two or more Restricted Subsidiaries, exclusively, (v) any transaction approved
by the Board of Directors of the Company as being fair and reasonable and in the
best interest of the Company involving the Company and one or more of its
directors, officers or employees with respect to their compensation or
incentives to continued service with the Company, or (vi) any Restricted Payment
permitted pursuant to the "Restricted Payments" covenant. (Section 4.20)
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms.
"Affiliate" of any person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person. A person shall be deemed to control a corporation if such person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
"Annualized Cash Flow" means, as of any date of determination, the
product of (i) Cash Flow for the fiscal quarter ending on such date or most
recently ended prior to such date, or as the context may require, Cash Flow for
the three-month period ending the month immediately preceding such date,
multiplied by (ii) four. The determination of Annualized Cash Flow of the
Company and its Restricted Subsidiaries shall be made on a consolidated basis.
"Capitalized Lease Obligations" means all rental obligations which, in
accordance with generally accepted accounting principles, are or will be
required to be capitalized on the books of the Company or any Subsidiary, in
each case taking as the amount thereof the amount which would be treated as
Indebtedness (net of interest expense) in accordance with such principles.
"Cash Flow" means, for any period for which the amount thereof is to
be determined, (a) the sum of (i) Net Income, plus (ii) interest, depreciation
and amortization, deferred taxes and other non-cash charges (to the extent
deducted in determining Net Income) to income of the Company and its Restricted
Subsidiaries for such period, less (b) deferred taxes or other non-cash items
which are a non-cash contribution to Net Income, excluding in each case all
non-recurring items. Cash Flow of the Company and its Restricted Subsidiaries
shall be determined, for any period for which the amount thereof is to be
determined, after giving effect to acquisitions and dispositions of assets of
the Company or any of the Restricted Subsidiaries (and designations of
Restricted Subsidiaries and Unrestricted Subsidiaries) during such period as if
such transactions had occurred on the first day of such period.
"CATV Business" of any person means the business of owning a cable
television system or systems and related communications activities.
"Change of Control" of the Company means the acquisition by any person
(other than the Company, any Subsidiary, any employee stock ownership plan or
other employee benefit plan of the Company or any Subsidiary, or any
Controlling Person) during any period of 12 consecutive months of beneficial
ownership of shares of the common stock of the Company representing in the
aggregate 30% or more of the combined voting power of all shares of the
Company's common stock, calculated on a fully diluted basis as of the date
immediately prior to the
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date of such acquisition (or, if there be more than one acquisition during such
twelve-month period, the date of the last such acquisition); provided, however,
that notwithstanding the foregoing no Change of Control shall be deemed to have
occurred if and for so long as the shares of the common stock of the Company
beneficially owned by the Controlling Persons represent in the aggregate 30% or
more of the combined voting power of all shares of the Company's common stock
calculated on a fully diluted basis.
"Code" means the Internal Revenue Code of 1986.
"consolidated," when used with reference to any financial term (but
not when used with respect to any tax return or tax liability), means the
aggregate for two or more persons of the amounts signified by such term for all
such persons, with intercompany items eliminated and, with respect to earnings,
after eliminating the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such person.
"Controlling Person" means each of (1) the Chairman of the Board of
the Company as of the date of the Indenture, (2) the President of the Company
as of the date of the Indenture, (3) each of the directors of the Company as of
the date of the Indenture, (4) the respective family members, estates and heirs
of each of the persons referred to in clauses (1) through (3) above and any
trust or other investment vehicle for the primary benefit of any of such
persons or their respective family members of heirs, (5) Kearns-Tribune
Corporation, a Delaware corporation or any successor thereto by merger or
consolidation and (6) the trustee under the Company's Employee Stock Purchase
Plan or any successor plan. As used with respect to any person, the term
"family member" means the spouse, siblings and lineal descendants of such
person. The trustee under the Company's Employee Stock Purchase Plan or any
successor plan shall be deemed to have beneficial ownership of all shares of
common stock of the Company held under the plan, whether or not allocated to or
vested in participants' accounts.
"Debt Service" of the Company and its Restricted Subsidiaries means,
for any period for which the amount thereof is to be determined, the sum of
(i) all interest paid or payable, and if floating interest obligations are
involved, interest at the rate in effect at the time of calculation, plus all
amounts of principal required to be paid during such period in respect of the
New Notes, any other then outstanding Short-Term Debt or Funded Debt
(excluding, however, the principal amount of any Renewable Indebtedness or
Refundable Indebtedness included in Funded Debt, as set forth in the definition
of "Funded Debt"), together with the aggregate amounts of all payments required
to be made by the Company or any of its Restricted Subsidiaries during such
period to obtain or effect the satisfaction or discharge of, or to acquire, the
New Notes, or any of such other Short-Term Debt or Funded Debt, provided that
(a) the determination of amounts payable in respect of such Funded Debt or
Short-Term Debt relating to any Minority Interest shall be made by reference to
any mandatory schedule for the retirement or redemption of such Minority
Interest, or if the Company or any Restricted Subsidiary is a party to any
repurchase or other agreement pursuant to which it is obligated, at the option
of the holder(s) thereof, to repurchase, redeem, retire or otherwise acquire
any Minority Interest or part thereof, as of the first date on which such
option may be exercised (whether or not in fact exercised), the amount payable
in respect of such Minority Interest shall be the full amount of the Company's
or such Restricted Subsidiary's obligations thereunder, and (b) the
determination of amounts payable in respect of Funded Debt or Short-Term Debt
of the Company or any Restricted Subsidiary consisting of unfunded pension
liabilities shall be made in accordance with the funding standard account
entitled "Amortization of Unfunded Past Service Liabilities" set forth in
Section 412(b)(2)B(ii) of the Code, and (ii) the aggregate amount of all
payments required to be made during such period by such person (determined as
if such person were called upon to perform such Guaranties under the terms of
the mandatory payment provisions of the underlying obligation, without giving
effect to any possible acceleration of such obligation) pursuant to, or to
obtain or effect the discharge of, such person's obligations under any Guaranty
during such period.
"Default" means any of the events specified in Section 5.01 (Events of
Default) of the Indenture whether or not any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act has been satisfied.
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"ERISA" means the Employee Retirement Income Security Act of 1974.
"Funded Debt" of any person means and includes, as of any date as of
which the amount thereof is to be determined, without duplication (i) all
Indebtedness of such person for borrowed money, any Guaranty by such person of
Indebtedness for borrowed money and any Capitalized Lease Obligation of such
person, whether secured or unsecured, which by its terms has a final maturity,
duration or payment date more than one year from the date of determination
thereof (including, without limitation, (x) any balance of Indebtedness which
was Funded Debt at the time of its creation maturing within one year from the
date of determination, and (y) any Indebtedness of such person for borrowed
money having a final maturity, duration or payment date within one year from
such date of determination, which, pursuant to the terms of a revolving credit
or similar agreement or otherwise, may be renewed or extended one or more
consecutive times at the option of such person to a final maturity, duration or
payment date more than one year from such date of determination, whether or not
theretofore renewed or extended), (ii) the present value of the aggregate
unfunded portion of all vested benefits under all Plans, (iii) any obligation of
the Company or any Restricted Subsidiary to redeem, purchase or otherwise
acquire from any other person (other than a Wholly-owned Restricted Subsidiary),
at the option of such person, any shares of any class of stock of, or other
interest in, the Company or any Restricted Subsidiary, and (iv) the par value or
other value of Money Market Preferred Stock of the Company or any Restricted
Subsidiary as to which dividends and other payments are calculated.
For purposes of calculating Funded Debt, (a) Indebtedness for borrowed
money which is governed by an agreement that provides for the automatic renewal
of the maturity of such Indebtedness subject only to the accuracy of
representations and warranties made in such agreement (which agreement, by its
terms, does not require confirmation as to the accuracy of representations and
warranties therein relating to litigation and material adverse changes for such
automatic renewal) and the absence of default thereunder ("Renewable
Indebtedness") shall be considered Indebtedness for borrowed money which has a
final maturity, duration or payment date more than one year from the date of
determination of the amount of Funded Debt to the extent such renewals thereof
permit such Indebtedness to mature more than one year from such date of
determination, and (b) the current maturities of Funded Debt, Indebtedness for
borrowed money represented by short-term commercial paper, and other short-term
indebtedness to the extent, in each case, that the Company or any Restricted
Subsidiary has unused availability under a committed credited facility which
has a final maturity, duration or payment date more than one year from the date
of determination of the amount of Funded Debt ("Refundable Indebtedness") and
the Company or any Restricted Subsidiary intends to utilize such unused
availability, or other Refundable Indebtedness, to refund or replace such
Refundable Indebtedness shall be considered Indebtedness for borrowed money
which has a final maturity, duration or payment date more than one year from
the date of determination. For the purposes of any computation of Debt
Service, any Refundable Indebtedness which the Company or any Restricted
Subsidiary is able to refund, as of the date of such determination, under the
unused availability of a committed credit facility shall be deemed to amortize
and to bear interest in the manner provided in such committed credit facility
as if the principal amount of such Refundable Indebtedness were Indebtedness
for borrowed money thereunder.
Notwithstanding the foregoing, Funded Debt shall not include (i)
Indebtedness for borrowed money of the Company owed solely to a Restricted
Subsidiary, (ii) Indebtedness for borrowed money of a Restricted Subsidiary
owed solely to the Company or another Restricted Subsidiary, and (iii)
Indebtedness for borrowed money of the Company or any Restricted Subsidiary
owed solely to any Unrestricted Subsidiary, subject in each case to the
provisions of the "Indebtedness to Unrestricted Subsidiaries" covenant, and
provided that if any such Indebtedness is sold or transferred by a Restricted
Subsidiary or an Unrestricted Subsidiary to a person other than a Subsidiary,
such Indebtedness shall be Funded Debt which shall be deemed to have been
incurred at the time of such sale or transfer.
"Gross Revenues" for any period means the gross revenues from
continuing operations of the Company and its Restricted Subsidiaries for such
period prior to deducting operating expenses, overhead, costs of goods sold,
provisions for taxes and reserves or any other deduction, all determined and
consolidated in accordance with generally accepted accounting principles after
eliminating all intercompany items.
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"Guaranty" of any person means and includes, as of any date as of
which the amount thereof is to be determined, without duplication (i) all
obligations of such person to purchase any materials, supplies or other
property, or to obtain the services of any other person, or for the sale or use
of any materials, supplies or other property, or the rendering of services, if
the relevant contract or other related document requires that payment for such
materials, supplies or other property to be purchased, or for such services to
be rendered, shall be made regardless of whether or not delivery of such
materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered or that payment for such materials,
supplies or other property to be sold or used, or payment for such services to
be rendered, shall be subordinated to any Indebtedness of such person owed to
the purchaser or user of such materials, supplies or other property, or the
beneficiary of such services, (ii) all obligations of such person to advance or
supply funds to, or to purchase property or services from, any other person, if
the purpose is to enable such other person to maintain working capital, net
worth or any other balance sheet condition or to pay debts, dividends or
expenses of such other person or to assure such other person or any third party
against any liability or loss, including, without limitation, obligations under
any agreement or understanding, oral or written, pursuant to which such person
is obligated to advance funds to or on behalf of any other person upon the
happening of one or more stated events, (iii) all contracts for the rental or
lease (as lessee) of any real or personal property which provide that the
payment obligations thereunder are absolute and unconditional under conditions
not customarily found in commercial leases then in general use or require that
the lessee purchase or otherwise acquire securities or obligations of the
lessor, and (iv) all guaranties, endorsements and other contingent obligations,
direct or indirect, on the part of such person (other than endorsements of
negotiable instruments for collection in the ordinary course of business) for
the payment, discharge or satisfaction of Indebtedness of others, including any
agreement, contingent or otherwise, to (x) purchase such Indebtedness of
others, or (y) purchase or sell property or services primarily to permit the
debtor in respect of such Indebtedness of others to pay the same or the owner
of such Indebtedness of others to avoid loss, or (z) supply funds to or invest
in any such debtor.
A Guaranty shall not include any letter of credit, any bond obligation
of, or any guarantee of performance by, the Company or any Restricted Subsidiary
undertaken or incurred in the ordinary course of its or their business as
presently conducted for or on behalf of a Subsidiary.
"Increased Debt Capacity" means an increase in the limitation on
Indebtedness which may be incurred under clause (2) of the "Indebtedness"
covenant by reference to Total Debt from seven times Annualized Cash Flow of
the Company and its Restricted Subsidiaries to eight times Annualized Cash Flow
of the Company and its Restricted Subsidiaries.
"Indebtedness" of the Company or any Restricted Subsidiary means and
includes, as of any date as of which the amount thereof is to be determined,
without duplication, (i) all items (other than capital items such as capital
stock, surplus and retained earnings, as well as reserves for taxes in respect
of income deferred to the future and other deferred credits and reserves) which
in accordance with generally accepted accounting principles would be included
in determining total liabilities as shown on the liability side of a balance
sheet of the Company or any Restricted Subsidiary as of such date, (ii) the
full amount of any contingent liability or obligation of the Company or any
Restricted Subsidiary, including, without limitation, the payment of money,
under or related to any preferred stock, any other security, right, or
interest, or any rights or interests attendant thereto or granted in connection
therewith, of the Company or such Restricted Subsidiary, any of which is issued
as, or in conjunction with, an anti-takeover or similar corporate protective
measure, such amount to be determined as of the time of issuance of such
preferred stock, other security, right or interest, without regard to when any
rights or interests thereunder may vest in or otherwise become exercisable by
the holders thereof, (iii) all obligations which are secured by any Lien
existing on any property or assets owned by the Company or any Restricted
Subsidiary (except capital stock of an Unrestricted Subsidiary owned by the
Company or a Restricted Subsidiary), whether or not the obligations secured
thereby shall have been assumed by the Company or any Restricted Subsidiary,
provided that in respect of secured, fully non-recourse obligations, the
maximum amount of the Indebtedness of the Company or any Restricted Subsidiary
shall be the lesser of the amount of the Indebtedness secured and the amount
carried on the books of the
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Company or any Restricted Subsidiary as at the time of any such determination as
the value of the property, asset or collateral securing such Indebtedness, and
(iv) all Guaranties of the Company or any Restricted Subsidiary.
Indebtedness shall not include any contingent liability or contingent
obligation with respect to any letter of credit, any bond obligation, or any
guarantee of performance, undertaken or incurred by the Company or any
Restricted Subsidiary in the ordinary course of its or their business (other
than in connection with the borrowing of money or the obtaining of credit) as
presently conducted for or on behalf of a Subsidiary.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing), any conditional sale or title retention agreement, and the filing
of or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction.
"Majority-in-Interest of Holders" means, when used with respect to the
New Notes generally, the holders of New Notes constituting, as of any date on
which a determination is made, at least 51% of the aggregate unpaid principal
amount of the outstanding New Notes of all series as of such date; and, when
used with respect to the New Notes of a particular series, the holders of New
Notes of such series constituting, as of any date on which a determination is
made, at least 51% of the aggregate unpaid principal amount of the outstanding
New Notes of that series as of such date.
"Minority Interest" means the shares of any class of the capital
stock, or any option, warrant or other right to purchase or acquire any capital
stock, other than Money Market Preferred Stock included in the definition of
Funded Debt or Short-Term Debt, of any Restricted Subsidiary owned or
controlled, directly or indirectly, by any person other than the Company or one
or more Wholly-owned Restricted Subsidiaries.
"Money Market Preferred Stock" means preferred stock issued on terms
where the rate of dividend paid thereon is determined by (i) reference to a
recognized financial index, or (ii) through an auction mechanism conducted by a
recognized financial institution.
"Net Income" or, if negative, "Net Loss" for any period means Gross
Revenues of the Company and its Restricted Subsidiaries for such period (taken
as a cumulative whole) less operating and non-operating expenses, including
provisions for all taxes and reserves (including reserves for deferred income
taxes) of the Company, all determined in accordance with generally accepted
accounting principles on a consolidated basis, but not including in Gross
Revenues any gains (net of expenses and taxes applicable thereto) in excess of
losses resulting from the sale, conversion or other disposition of non-current
or capital assets, any gains resulting from the write-up of assets, any gains
resulting from the defeasance or acquisition of the securities of the Company
or any Restricted Subsidiary, any earnings of any person acquired by the
Company or any Restricted Subsidiary through purchase, merger or consolidation
or otherwise for any year prior to the date of acquisition, and excluding from
Gross Revenues any undistributed earnings or losses of Affiliates of the
Company other than Restricted Subsidiaries; all determined in accordance with
generally accepted accounting principles.
"Plan" means any plan (other than a Multi-employer Plan) subject to
Title IV of ERISA maintained for employees of the Company or any ERISA
Affiliate (and any such plan no longer maintained by the Company or any of its
ERISA Affiliates to which the Company or any of its ERISA Affiliates has made
or was required to make any contributions within any of the preceding five
years).
"Prohibited Act" means any one or more of the following: (i) the
incurrence of any Indebtedness which would constitute Short-Term Debt or Funded
Debt not then permitted under the "Indebtedness" covenant; (ii) any transaction
which would involve the making of a Restricted Payment or other payment not
then permitted under the "Restricted Payments" covenant; (iii) any transaction
pertaining to the sale, lease, transfer or other disposition of assets not then
permitted under the "Sale of Assets" covenant; or (iv) any designation of a
Restricted Subsidiary or
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any designation deleting a Restricted Subsidiary not then permitted to be made
under the "Designation of Restricted Subsidiaries" covenant.
"Prohibited Transaction" means any transaction described in Section
406 of ERISA which is not exempt by reason of Section 408 of ERISA or the
transitional rules set forth in Section 414(c) of ERISA and any transaction
described in Section 4975(c) of the Code which is not exempt by reason of
Section 4975(c)(2) or Section 4975(d) of the Code, or the transitional rules of
Section 2003(c) of ERISA.
"Restricted Subsidiary" means, as of any date of determination, any
corporation organized under the laws of any state of the United States or the
District of Columbia, provided that not less than 80% of the voting control
thereof and not less than 80% of the overall economic equity therein, at the
time as of which any determination is being made, is owned, beneficially and of
record, by the Company or one or more Wholly-owned Restricted Subsidiaries, or
both, which corporation has been designated as a Restricted Subsidiary, unless
and until designated as an Unrestricted Subsidiary.
"Senior Debt" means, as of any date as of which the amount thereof is
to be determined, (i) the aggregate amount of all Total Debt then outstanding,
less (ii) the aggregate amount of all Subordinated Debt then outstanding.
"Short-Term Debt" of any person means and includes, as of any date as
of which the amount thereof is to be determined, without duplication, all
Indebtedness of such person for borrowed money, any Guaranty by such person of
Indebtedness for borrowed money and any Capitalized Lease Obligation of such
person, whether secured or unsecured, other than Funded Debt. Notwithstanding
the foregoing, Short-Term Debt shall not include (i) Indebtedness for borrowed
money of the Company owed solely to a Restricted Subsidiary, (ii) Indebtedness
for borrowed money of a Restricted Subsidiary owed solely to the Company or
another Restricted Subsidiary, and (iii) Indebtedness for borrowed money of the
Company or any Restricted Subsidiary owed solely to any Unrestricted
Subsidiary, subject in each case to the provisions of the "Indebtedness to
Unrestricted Subsidiaries" covenant, and provided that if any such
Indebtedness is sold or transferred by a Restricted Subsidiary or an
Unrestricted Subsidiary to a person other than a Subsidiary, such Indebtedness
shall be Short-Term Debt which shall be deemed to have been incurred at the
time of such sale or transfer.
"Subordinated Debt" means all unsecured Funded Debt of the Company
which is subordinated in right of payment to (x) the prior payment of the New
Notes, and (y) all other Funded Debt of the Company which is not subordinated
to any other Indebtedness of the Company.
"Subsidiary" means any corporation organized under the laws of any
state of the United States or the District of Columbia, at least 50% of the
total combined voting power of all classes of voting stock of which shall, at
the time as of which any determination is being made, be owned by the Company
either directly or through Subsidiaries.
"Total Debt" means, as of any date as of which the amount thereof is
to be determined, the sum of (i) the aggregate amount of consolidated
Short-Term Debt of the Company and its Restricted Subsidiaries then
outstanding, plus (ii) the aggregate amount of consolidated Funded Debt of the
Company and its Restricted Subsidiaries then outstanding.
"Treasury Yield" means, when used with respect to the New Notes of any
series, the yield which shall be imputed from the yields of those actively
traded "On the Run" United States Treasury Notes having maturities as close as
practicable to the Weighted Average Life to Maturity of the New Notes of such
series interpolating linearly between representative yields (as necessary).
"On the Run" United States Treasury Notes shall mean the most recently
auctioned United States Treasury Notes for such maturity, which are currently
available through Telerate page 500. The yields of such United States Treasury
Notes shall be determined as of 10:00 A.M. Eastern Time on the fifth Business
Day prior to the applicable Optional Prepayment Date or Redemption Date.
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"Unrestricted Subsidiary" means, as of any date of determination, any
Subsidiary of the Company that is not a Restricted Subsidiary.
"Weighted Average Life to Maturity" as applied to any Indebtedness at
any date means the number of years obtained by dividing (a) the then unpaid
principal amount of such Indebtedness into (b) the total of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or required payment, including payment at final
maturity, in respect thereof, by (ii) the number of years (calculated to the
nearest one-twelfth) which will elapse between such date and the date on which
such payment is to be made.
"Wholly-owned Restricted Subsidiary" means any Restricted Subsidiary
all of whose outstanding shares (other than directors' qualifying shares
required by law) of every class of capital stock, at the time as of which any
determination is being made, are owned, beneficially and of record, by the
Company or one or more other Wholly-owned Restricted Subsidiaries, or both.
DENOMINATIONS AND FORM
The New Notes will be issued only in registered form, without coupons,
in denominations of $100,000 in Original Principal Amount and any integral
multiple thereof. (Section 2.02)
REGISTRAR AND PAYING AGENT
The Company will maintain an office or agency where the New Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where New Notes may be presented for payment ("Paying Agent").
The Company may have one or more co-Registrars (provided that there will be
only one security register, which will be maintained by the principal
Registrar) and one or more additional paying agents with respect to any series
of New Notes. Initially, the Trustee will act as Paying Agent and Registrar
for each series of New Notes. (Section 2.03)
TRANSFER AND EXCHANGE
New Notes of any series will be exchangeable at the option of the
holder for an equal aggregate Original Principal Amount of New Notes of the
same series of other authorized denominations and otherwise containing
identical terms and provisions. Every New Note presented or surrendered for
registration of transfer or for exchange shall be duly endorsed, or accompanied
by appropriate transfer documents duly executed, by the registered holder or
his attorney duly authorized in writing. No service charge will be made for
any registration of transfer or exchange of New Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
The Registrar shall not be required to register the transfer of or
exchange (i) any New Note to be prepaid at the option of the Company in
accordance with the provisions described under "-- Optional Prepayment" or any
New Series C Note in respect of which a prepayment offer made by the Company in
accordance with the provisions described under "-- Optional Prepayment" is
validly accepted by the holder thereof (except, in the case of any such New
Note (including any such New Series C Note) not prepaid in full, a transfer or
exchange thereof after notation has been made thereon by the Trustee following
the relevant Optional Prepayment Date of the amount of such prepayment and the
change in the amount of each Principal Installment thereafter due and payable
with respect to such New Note), or (ii) any New Note in respect of which a
notice requiring the purchase thereof by the Company at the option of the
holder following a Put Event has been given by such holder in accordance with
the provisions described under "-- Change of Control" (except, in the case of
any New Note to be so purchased in part, the portion thereof not to be so
purchased).
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The Indenture further provides that, if the Company solicits the
consent of the holders of New Notes to a Prohibited Act or an Increased Debt
Capacity in accordance with the provisions described under "-- Optional
Redemption of Non-Consenting Notes", the Registrar shall not be required to
register the transfer of or exchange any New Notes during the period commencing
with the day following the date of the Company's written request for such
consent (or, if a record date has been fixed, the day following such record
date) and ending on the second full Business Day following the last day on
which consent may be given by holders in response to such solicitation (which
day (the "Final Consent Date") may not be more than 30 days after the date of
such written request). If the Company has not received the consent of a
Majority-in-Interest of Holders to the Prohibited Act or Increased Debt
Capacity by the Final Consent Date, then the Registrar shall also not be
required to register the transfer of or exchange any Non-Consenting Note unless
the Company advises the Registrar that it will not exercise its option to
redeem the Non-Consenting Notes, or the Company fails to give notice of such
optional redemption to the holders of Non-Consenting Notes within the time
period specified in the Indenture or to deposit the redemption price therefor
with the Paying Agent as and when required by the Indenture. (Section 2.06)
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Subject to certain exceptions, the Indenture or the New Notes of any
series may be amended or supplemented, and compliance with any provision of the
Indenture or of the New Notes by the Company may be waived, with the consent of
a Majority-in-Interest of Holders of the New Notes of all series or of the
series affected by the amendment, supplement or waiver, as applicable.
(Section 8.02) Without the consent of any holder of New Notes, the Company and
the Trustee may amend or supplement the Indenture or the New Notes of any
series (i) to cure any ambiguity, defect or inconsistency, (ii) to provide for
uncertificated New Notes in addition to certificated New Notes (so long as any
"registration-required obligation" within the meaning of Section 163(f)(2) of
the Code is in registered form for purposes of the Code), (iii) to make any
change that, in the good faith opinion of the Board of Directors, does not
materially adversely affect the rights of any holder of New Notes, or (iv) to
make certain other changes specified in the Indenture. (Section 8.01) In the
case of a Prohibited Act or Increased Debt Capacity for which the consent of a
Majority-in-Interest of Holders was solicited by the Company and not received,
if the Company exercises its right to redeem all and not less than all the
Non-Consenting Notes pursuant to the provisions described under "-- Optional
Redemption of Non-Consenting Notes" and deposits with the Paying Agent or sets
aside and segregates in trust money sufficient to pay the aggregate redemption
price for such New Notes, then the holders of New Notes will be deemed to have
consented to the taking of or engaging in such Prohibited Act or the Increased
Debt Capacity, as applicable. (Section 4.21)
DEFAULTS AND REMEDIES
An Event of Default with respect to New Notes of any series means any
of the following: (i) the Company shall default in the payment or prepayment
of principal or premium on any New Note of such series when the same shall
become due; (ii) the Company shall default in the payment or prepayment of any
interest on any New Note of such series when the same shall become due, and
such default shall remain unremedied for five days; (iii) any of the Company or
any Restricted Subsidiary fails to pay any part of the principal of, the
premium, if any, or the interest on, or any other payment of money due under,
any of its Indebtedness (other than the New Notes of that series) or any
Capitalized Lease with respect to which it is obligated, having a then
outstanding aggregate principal amount (in the case of Indebtedness) or
relating to property or other assets having an aggregate value (in the case of
a Capitalized Lease) of $10,000,000 or more, beyond any period of grace with
respect thereto; or any of the Company or any Restricted Subsidiary fails to
perform or observe any other agreement, term or condition contained in any
document evidencing or securing such Indebtedness, or in such Capitalized
Lease, or in any agreement under which any such Indebtedness was issued or
created, in each case, if the effect of such failure is to cause, or permit the
holders of such Indebtedness to cause, or permit any other party to such
Capitalized Lease to cause, any payment in respect of such Indebtedness or such
Capitalized Lease to become due prior to its stated date of maturity, whether
or not such failure or default is waived by, or on behalf of, the holders of
such Indebtedness or by any other party to such Capitalized Lease; (iv) any
representation or warranty made in any certificate delivered to the Trustee by
the Company in connection with or pursuant to the Indenture shall prove to be
false or misleading in any material respect
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on the date as of which made; (v) the Company shall fail to perform or observe
any of its other agreements or covenants contained in the Indenture or in the
New Notes and such failure continues for 30 days after the Trustee or the
holders of at least 25% in aggregate unpaid principal amount of the New Notes
notifies the Company of such failure; (vi) certain events of bankruptcy or
insolvency shall occur; (vii) any order, judgment or decree shall be entered in
any proceedings against the Company or any Restricted Subsidiary decreeing the
dissolution of the Company or such Restricted Subsidiary and such order,
judgment or decree remains unstayed and in effect for more than 90 days; (viii)
any final judgment for the payment of money shall be rendered against the
Company or any Restricted Subsidiary or any judgment, writ of attachment, or
similar process shall be issued or levied against a substantial part of its and
their property or assets, taken as a whole, and such judgment, writ or other
order shall not be discharged within 90 days from the date of entry thereof or
within such longer period as the execution of such judgment shall have been
stayed, and such judgment, together with all other such judgments, exceeds in
the aggregate $10,000,000; or (ix) certain events or conditions shall occur
with respect to any Plan or a Multi-employer Plan and such event or condition
would result in the aggregate amount of the Company's or a Restricted
Subsidiary's liability to a Plan or a Multi-employer Plan or to the Pension
Benefit Guaranty Corporation under Sections 4062, 4063, 4064, 4201 or 4202 of
ERISA being in excess of 5% of the consolidated net earnings of the Company and
its Restricted Subsidiaries, and such liability shall not be covered in full by
insurance. (Section 5.01) If an Event of Default (other than an Event of
Default specified in clause (i), (ii), (vi) or (vii)) occurs with respect to
outstanding New Notes and is continuing, the Trustee or a Majority-in-Interest
of Holders of the New Notes may declare to be due and payable immediately (A)
the unpaid principal amount of all of the New Notes then outstanding and (B)
accrued interest thereon. The Indenture provides for automatic acceleration of
such amounts upon the occurrence of the events specified in clauses (vi) and
(vii) above. If an Event of Default specified in clause (i) or (ii) above
occurs and is continuing with respect to the New Notes of any series, a
Majority-in-Interest of Holders of New Notes of that series may declare to be
due and payable immediately (A) the unpaid principal amount of all of the New
Notes of such series then outstanding and (B) interest accrued thereon. Upon
the acceleration of New Notes of any series (other than an automatic
acceleration upon the occurrence of an Event of Default described in clause
(vi) or (vii) above), in addition to the unpaid principal amount and interest
required to be paid by the Company in accordance with the terms of the New
Notes of such series, the Company shall also pay, to the extent permitted by
law, a premium on the entire unpaid principal amount of each outstanding New
Note of such series equal to the maximum premium that would have been payable
with respect to such New Note if such New Note were then being prepaid in full
at the option of the Company in accordance with the provisions described under
"-- Optional Prepayment" (but calculated without regard to the provision that
states that no prepayment premium is payable after a date specified for the New
Notes of each series). The holders of not less than 66 2/3% in aggregate
unpaid principal amount of the outstanding New Notes (or, in the case of an
acceleration of New Notes of a particular series as a result of the occurrence
of an Event of Default specified in clause (i) or (ii) above with respect to
such series, the outstanding New Notes of the series with respect to which the
acceleration applies) may rescind an acceleration and its consequences with
respect to the New Notes if all existing Events of Default (other than the
non-payment of the principal amount of, premium and accrued interest on the New
Notes that have become due solely by such acceleration) with respect to the New
Notes have been cured or waived and if the rescission would not conflict with
any judgment or decree. (Section 5.02) Subject to certain exceptions, a
Majority-in-Interest of Holders of the New Notes may waive on behalf of the
holders of all of the New Notes an existing Default or Event of Default and its
consequences and, when so waived, such Default or Event of Default is deemed
cured and not continuing. (Section 5.04) Subject to certain limitations, a
Majority-in-Interest of Holders of New Notes may direct the Trustee in its
exercise of any trust or power with respect to the New Notes. (Section 5.05)
The Trustee may withhold from holders of New Notes of any series notice of any
continuing default (except a default in payment of principal, premium, if any,
or interest on any New Note of such series) if it determines that withholding
notice is in their interest. (Section 6.05) The Company is required to file
periodic reports with the Trustee as to the absence of any default. (Section
4.06)
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NO PERSONAL LIABILITY
No past, present or future director, officer, employee or stockholder,
as such, of the Company or the Trustee or any successor of either thereof shall
have any liability for any obligation of the Company or the Trustee under the
New Notes or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of New Notes by
accepting a New Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the New Notes. (Section
9.11)
SATISFACTION AND DISCHARGE
The Company's obligations under the New Notes of any series and the
Indenture with respect to the New Notes of such series (except for certain
specified obligations) will be satisfied and discharged in accordance with the
provisions of the Indenture if either (i) all New Notes of such series
previously authenticated and delivered (other than destroyed, lost or
wrongfully-taken New Notes which have been replaced or paid, or New Notes for
whose payment money has theretofore been held in trust and thereafter repaid to
the Company) have been delivered to the Trustee for cancellation, or (ii) the
Notes of such series mature within one year or are to be prepaid in full within
one year under arrangements satisfactory to the Trustee or notice of redemption
of all of the outstanding Notes of such series has been given pursuant to the
Indenture and the Company irrevocably deposits in trust with the Trustee (or
another trustee satisfying the requirements of the Indenture) money or U.S.
Government Obligations or a combination thereof sufficient to pay the unpaid
principal amount of, premium, if any, and interest on all New Notes of such
series previously authenticated and delivered, and not theretofore cancelled or
delivered to the Trustee for cancellation (other than any such New Note
referenced in the parenthetical in clause (i) above) to maturity, prepayment or
redemption, as the case may be. (Section 7.01)
THE TRUSTEE
The Bank of New York acts as depository for funds of, makes loans to,
and performs other services for the Company and certain of its affiliates in
the normal course of business and acts as trustee with respect to several
series of the Company's outstanding senior debt securities. The Bank of New
York is also acting as Exchange Agent for the Exchange Offer and serves as
transfer agent and registrar for the Class A and Class B Common Stock of the
Company. John C. Malone, President and a director of the Company, is a
director of The Bank of New York.
The Trustee in its individual or any other capacity may become the
owner or pledgee of New Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not the Trustee,
provided it complies with the terms of the Indenture. (Section 6.03)
ADDITIONAL INFORMATION
The Indenture is an exhibit to the Registration Statement. Anyone who
receives this Prospectus may obtain copies of the Indenture without charge by
writing to Stephen M. Brett, Esq., Senior Vice President of the Company, at the
address set forth under "The Company". The foregoing summary of certain
provisions of the Indenture does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all provisions of the Indenture,
including the definitions of certain terms. Wherever particular provisions or
defined terms of the Indenture are referred to, such provisions or defined
terms are incorporated herein by reference.
COMPARISON OF EXISTING NOTES AND NEW NOTES
The covenants, events of default and terms of each series of Existing
Notes are substantially similar to the covenants, events of default and terms
of the corresponding series of New Notes for which they may be exchanged
pursuant to the Exchange Offer, except as set forth below.
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PAYMENT PROVISIONS
Principal Payments. The principal payment schedules for the New Notes
and the Existing Notes of the respective series are substantively the same.
The Note Exchange Agreement specifies an aggregate principal amount that is to
be paid on each Principal Payment Date for the applicable series of Existing
Notes and provides for the application of such aggregate amount to the payment
of the Existing Notes of such series on a pro rata basis (based on the
aggregate outstanding principal amount of the Existing Notes of such series).
In lieu of providing for an aggregate payment and the pro rata application
thereof to the New Notes of a series, the Indenture specifies the amount of the
principal payment to be made per $100,000 in Original Principal Amount of each
New Note on the applicable Principal Payment Date for the New Notes of such
series. In the event of any partial prepayment of principal, the Note Exchange
Agreement and the Indenture each provide that the aggregate principal amount of
the prepayment made with respect to the Existing Notes or the New Notes, as
applicable, of a series, shall be applied to the prepayment of each outstanding
Existing Note or New Note, as applicable, of such series pro rata in accordance
with the respective unpaid principal amounts of such Existing Notes or New
Notes. The Indenture further provides that the amount prepaid with respect to
each New Note shall be applied ratably to the unpaid principal amount per
$100,000 in Original Principal Amount of such New Note, with the amount of such
prepayment per $100,000 in Original Principal Amount of a New Note being
rounded, if applicable, to the nearest $1.00. In the event of a partial
prepayment of the principal of the Existing Notes or New Notes, as applicable,
of a series, both the Note Exchange Agreement and the Indenture provide for the
reduction of the amount of the regularly scheduled installments of principal
thereafter due and payable with respect to the Existing Notes or New Notes, as
applicable, of such series. In the case of the Note Exchange Agreement, the
aggregate principal amount of such prepayment is applied to reduce pro rata the
aggregate amount of each scheduled principal payment thereafter due with
respect to the Existing Notes of the applicable series. In the case of the
Indenture, the amount prepaid per $100,000 in Original Principal Amount of a
New Note is applied to reduce pro rata the amount of each Principal Installment
per $100,000 in Original Amount of such New Note that is thereafter due.
Because the scheduled principal payments for the Existing Notes are stated in
terms of an aggregate amount for all Existing Notes of a series, rather than an
amount per Existing Note, the Note Exchange Agreement also provides that in the
event of any repurchase or optional redemption in part of the Existing Notes of
a series the aggregate amount of such repurchase or redemption shall be applied
to reduce pro rata the aggregate principal payments thereafter scheduled to be
made with respect to the Existing Notes of such series. See "Description of
New Notes -- Principal Installments".
Repurchases. The Note Exchange Agreement provides that, prior to the
Issue Date, the Company will not repurchase any Existing Notes of a holder
unless prior to any such repurchase the Company offers to repurchase on a pro
rata basis a proportionate principal amount of the Existing Notes of all
holders of Existing Notes of such series on the same terms and offers to
repurchase on a pro rata basis a proportionate principal amount of the Existing
Notes of all holders of Existing Notes of each other series on economically
equivalent terms. From and after the Issue Date this provision of the Note
Exchange Agreement will cease to be applicable and the Company may at any time
and from time to time make purchases of any Existing Notes and New Notes
outstanding on terms acceptable to the holders of the Notes being repurchased.
Optional Prepayments. The provisions of the Note Exchange Agreement
and the Indenture relating to prepayments of the Existing Notes and the New
Notes, respectively, at the option of the Company are substantially identical
except as described below. In accordance with the Note Exchange Agreement, any
partial prepayment with respect to the Existing Series D Notes and Existing
Series E Notes must be in the minimum amount of $1,000,000 and additional
increments of $500,000 and be allocated on a pro rata basis between the two
series (based upon the aggregate unpaid principal amount of all Existing Series
D Notes and Existing Series E Notes outstanding). A similar requirement
applies to the optional prepayment of the Existing Series B Notes and Existing
Series C Notes prior to specified dates. Pursuant to the Indenture, if the
Company elects to make a partial prepayment with respect to the New Series D
Notes, it must likewise make an optional prepayment of a pro rata portion of
the New Series E Notes and vice versa. The minimum amount requirement,
however, would apply to the amount of the prepayment with respect to one of the
two series to be prepaid, rather than to the total amount to be prepaid of both
series as
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in the Note Exchange Agreement, and the amount of the prepayment with respect
to the other of the two series would be determined on the basis of the pro rata
payment requirement. A similar variation from the terms of the Note Exchange
Agreement applies with respect to optional prepayments of the New Series B
Notes and New Series C Notes.
If the Company elects to make an optional prepayment with respect to
the Existing Series B Notes or the New Series B Notes during the period
beginning on February 1, 2000 and ending on January 31, 2001, then the Note
Exchange Agreement and the Indenture, respectively, require the Company to make
a simultaneous offer to prepay the same portion of the Existing Series C Notes
or New Series C Notes, as applicable. Pursuant to the Note Exchange Agreement,
a holder of an Existing Series C Note desiring to accept such offer must so
notify the Company (by telephone confirmed promptly in writing) within eight
business days of its receipt of such prepayment notice. In accordance with the
Indenture, to accept such prepayment offer, the holder of a New Series C Note
must deliver written notice of such acceptance to the Paying Agent by the close
of business on the sixteenth day preceding the Optional Prepayment Date. See
"Description of New Notes -- Optional Prepayments".
Designated Event. With respect to the Existing Notes only, in the
event that any "Designated Event" shall occur, each holder of an Existing Note
shall have the right to require the Company to purchase all of the Existing
Notes of such holder, at a price for each Existing Note to be purchased equal
to the unpaid principal amount of such Existing Note, plus all accrued and
unpaid interest thereon to the date fixed for purchase (the "Designated Event
Purchase Date"), plus a premium equal to the excess, if any, of (i) the net
present value of all remaining scheduled payments of interest and principal on
such Existing Note, discounted at the Basic Discount Rate for such series of
Existing Notes, over (ii) the outstanding principal amount of such Existing
Note. Within 10 days following the occurrence of a Designated Event, the
Company will give notice to each holder of an Existing Note describing the
facts and circumstances giving rise to such Designated Event and stating that
such holder's Existing Notes will be prepaid by the Company pursuant to the
terms of the Note Exchange Agreement if such holder so elects. Any holder
intending to exercise its right to require the Company to purchase its Existing
Notes shall give written notice to the Company no later than 30 days after the
Company gives notice of such Designated Event (or, if no notice is given, not
later than 60 days after such holder obtains actual knowledge that such
Designated Event has occurred). The Designated Event Purchase Date shall be a
date fixed by the Company which shall be not less than 30 days nor more than 60
days after the giving by such holder of the notice that such holder elects to
have the Existing Notes held by such holder purchased (or, if no date is
specified by the Company, on the 60th day after the giving of such notice by
such holder). On the 35th day following the giving of notice by the Company of
a Designated Event or, if no notice is given, on the 65th day after such
Designated Event occurred, the Company will notify each holder of an Existing
Note of the aggregate principal amount of all Existing Notes which the holders
thereof have required to be purchased and the identity of each such holder.
Each holder of an Existing Note shall then have the additional right,
exercisable by written notice given to the Company not later than five business
days after the giving of such notice by the Company, to elect to require the
Company to purchase all of the Existing Notes held by such holder if such
holder had not previously requested such purchase in connection with such
Designated Event or to revoke its election to require the Company to purchase
all of the Existing Notes held by such holder in connection with such
Designated Event (but not any subsequent Designated Event). In the event that
any holder exercises such additional right to elect to require the Company to
purchase the Existing Notes held by such holder, the Company shall purchase, on
a date specified by the Company (which date shall not be less than 30 days nor
more than 60 days after the giving by such holder of such notice or, if no date
is specified by the Company, on the 60th day after the giving of such notice by
such holder), the Existing Notes held by such holder, at the same price
described above.
The Note Exchange Agreement defines a "Designated Event" as the
authorization by the Company's Board of Directors (or a duly authorized
committee thereof) of any of the following: (a) a consolidation or merger of
the Company or any person which owns, directly or indirectly, not less than a
majority of the outstanding shares of each class of the Company's common stock
(a "Holding Company") or a sale of all or substantially all of the properties
and assets of the Company or any Holding Company; (b) a dividend or other
distribution by the Company to its shareholders, in one transaction or a series
of related transactions, of cash, property or securities (other than a
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dividend or other distribution (i) of cash, property or securities of or with
funds or assets provided by an Unrestricted Subsidiary, or (ii) payable solely
in capital stock of the Company that is not convertible into or exchangeable
for any debt securities of the Company), having an aggregate fair market value
at the time of such distribution that is 30% or more of the fair market value
of the common stock of the Company outstanding immediately prior to such
distribution (both such fair market values as determined by the Board of
Directors or such committee); or (c) an acquisition by the Company or any
Restricted Subsidiary for cash, property or securities (other than (i) cash,
property or securities from or of an Unrestricted Subsidiary, or (ii) capital
stock of the Company that is not convertible into or exchangeable for any debt
securities of the Company), in one transaction or a series of related
transactions, of more than 30% of each class of the common stock of the Company
outstanding immediately prior to the commencement of such acquisition; provided
that any event described above shall be a Designated Event only at such time,
if any, within the 12-month period immediately following the occurrence of such
event, that the aggregate amount of Total Debt then outstanding exceeds eight
times Annualized Cash Flow for the then most recent three-month period.
Change of Control. The circumstances which will give rise to a Put
Event following a Change of Control are essentially the same under the Note
Exchange Agreement and the Indenture, with certain exceptions. Under the
Indenture, one of the elements of a Put Event with respect to the New Notes of
a series is the downgrading of the then current rating of the New Notes of such
series by either D&P or Moody's to the extent provided in the Indenture. With
respect to the Existing Notes, this element of a Put Event is phrased in terms
of the downgrading of the Company's publicly traded senior debt securities of
any series. If a Put Event occurs with respect to any series of New Notes,
each holder of New Notes of such series shall have the right to require the
Company to repurchase all or any portion of such holder's New Notes, provided
that such portion is $100,000 in Original Principal Amount or an integral
multiple thereof. If a Put Event occurs with respect to any series of Existing
Notes, holders of Existing Notes have the same right to require the Company to
purchase all or any portion of their Existing Notes except that such portion
shall be in minimum authorized denominations of $1,000,000 or the unpaid
principal amount of such Existing Note if less than $1,000,000. Under the
Indenture, any holder intending to exercise its right to require the Company to
purchase all or any portion of such holder's New Notes following a Put Event
must deliver notice of its intention to the Paying Agent and concurrently
present and surrender to the Paying Agent the New Notes to be purchased no
later than 15 days prior to the date fixed for purchase of such New Notes.
While the Note Exchange Agreement requires holders of Existing Notes to give
similar notice to the Company of their intention to require the Company to
purchase all or any portion of their Existing Notes, holders of Existing Notes
are not required to physically surrender their Existing Notes at the time such
notice is given in order for their right to have been properly exercised. See
"Description of the New Notes -- Change of Control".
Method of Payment; Transfers; Calculation of Premiums. Payments of
principal, interest and premium, if any, with respect to an Existing Note are
required to be made by transfer of immediately available funds for credit to
the account of the holder of such Existing Note as specified in the Note
Exchange Agreement or as such holder may designate in writing. Each holder has
agreed that before selling or otherwise transferring an Existing Note, such
holder will make a notation on such Existing Note of all principal payments
previously made thereon and of the date to which interest thereon has been
paid, and will notify the Company of the name and address of the transferee or
assignee of such Existing Note and of the notations so made on such Existing
Note. If any payment of principal, interest or premium with respect to an
Existing Note falls due on a day which is not a business day, then such payment
is required to be made on the next preceding Business Day. No presentation or
surrender of an Existing Note is required in order to receive any payment of
principal, interest or premium thereon. An Existing Note that has been paid,
prepaid or repurchased in full must be surrendered to the Company for
cancellation. The Existing Notes are transferable by endorsement and delivery.
The Company maintains a Note Register at its principal office in which the
Existing Notes are registered and transfers and exchanges thereof may be
recorded. Any Existing Note issued in exchange for any Existing Note or Notes
upon transfer thereof carries the rights to unpaid interest and interest to
accrue which were carried by the Existing Note or Notes so transferred. See
"Description of New Notes -- Method of Payment" and " -- Transfer and
Exchange".
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The Note Exchange Agreement and the Indenture provide that the
Company's calculation of the amount of any premium payable upon a prepayment,
redemption or purchase of Existing Notes or New Notes, respectively, as set
forth in an officers' certificate shall be binding on the holders of such Notes
in the absence of manifest error. The Note Exchange Agreement further
provides, however, that if prior to the date fixed for such payment, any holder
of Existing Notes objects to the Company's calculation of the premium payable
with respect to such holder's Existing Notes (which objection shall be in
writing and set forth in reasonable detail such holder's computation of the
premium), then the computation of such holder shall be binding on the Company
with respect to such holder's Existing Notes absent manifest error.
COMPARISON OF CERTAIN COVENANTS
Designation of Restricted Subsidiaries. The conditions to which the
Company's right to designate an Unrestricted Subsidiary as a Restricted
Subsidiary or designate a Restricted Subsidiary as an Unrestricted Subsidiary
is subject under the Note Exchange Agreement and the Indenture are
substantially identical, except that the Note Exchange Agreement includes the
further condition that after giving effect to such designation, there shall not
be a material and adverse effect on the Company and its Restricted Subsidiaries
with respect to the prospects for the future generation of Cash Flow,
Subscriber Penetration Levels (as defined in the Note Exchange Agreement), the
general mix of assets, or the condition, quality and developmental level of
technical equipment. Further, the Note Exchange Agreement, requires the
Company to provide each original holder of an Existing Note, each assignee of
the entirety of the interest of any such holder and each holder of at least
$2,000,000 aggregate principal amount of Existing Notes (each, a "Designated
Holder") with notice not less than 20 business days after making such
designation and, in the event any newly designated Subsidiary represents
greater than 30% of the Annualized Cash Flow for the three-month period ending
the month immediately preceding the date of such designation, such notice shall
also be accompanied by a certificate of an officer of the Company containing
information as to the Cash Flow, Subscriber Penetration Levels (as defined in
the Note Exchange Agreement) and financial condition of such Subsidiary. See
"Description of New Notes -- Certain Covenants -- Designation of Restricted
Subsidiaries".
Restricted Payments. The covenant in the Note Exchange Agreement with
respect to Restricted Payments is substantially identical to the corresponding
covenant in the Indenture, except that the Note Exchange Agreement also
prohibits the Company and the Restricted Subsidiaries from making any payment
of principal, interest or premium, if any, in respect of Subordinated Debt if a
Designated Event shall have occurred (other than a Designated Event with
respect to which all time periods for the holders of Existing Notes to be
prepaid as described under "Payment Provisions -- Designated Event" have fully
expired), other than regularly scheduled payments with respect to Approved
Subordinated Debt in accordance with its terms as in effect on the date of the
Note Exchange Agreement. See "Description of New Notes -- Certain Covenants --
Restricted Payments." The Approved Subordinated Debt consists of the Company's
11 1/8% senior subordinated debentures due October 1, 2003, in the aggregate
outstanding principal amount of $441,000, which were issued pursuant to an
indenture dated as of September 29, 1988, as amended, between the Company and
National Westminster Bank USA, as trustee.
Loan and Investment Limitations. The specified exceptions set forth
in the Note Exchange Agreement to the covenant restricting Investments by the
Company and the Restricted Subsidiaries are substantially identical to those
set forth in the Indenture, except that, in the case of the exception for
Investments in or with respect to any Unrestricted Subsidiary that are made in
anticipation of the receipt of funds in the day-to-day operations of the
Subsidiaries sufficient to reimburse the Company or the Restricted Subsidiary
making such Investment, as applicable, pursuant to the Company's normal cash
management practices, the Note Exchange Agreement requires that such funds be
anticipated to be received within 45 days after such Investment is made. See
"Description of New Notes -- Certain Covenants -- Loan and Investment
Limitations".
Liens. The Indenture and the Note Exchange Agreement each contain a
covenant which limits the ability of the Company or any Restricted Subsidiary
to create, assume or suffer to exist any Lien upon any of their respective
properties or assets, subject to certain exceptions. The Indenture includes an
exception, which is not
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present in the Note Exchange Agreement, that specifically permits the Company
or a Restricted Subsidiary to create, assume or suffer to exist a Lien which
would not otherwise be permitted under such covenant if the Company makes or
causes to be made effective provision whereby the then outstanding New Notes
are secured equally and ratably with (or prior to) the Indebtedness secured by
such Lien for so long as such Indebtedness shall be so secured and certain
other requirements are met. See "Description of New Notes -- Certain Covenants
- -- Liens". The Note Exchange Agreement contains a separate affirmative
covenant which provides that if the Company or any Restricted Subsidiary shall
create or assume any Lien upon any of its respective properties or assets that
is not permitted under the Liens covenant contained in the Note Exchange
Agreement, the Company, within 30 days thereof, shall either make or cause to
be made effective provision whereby the Existing Notes will be secured by such
Lien equally and ratably with any and all other Indebtedness thereby secured as
long as any such other Indebtedness shall be so secured, or shall cause such
Lien to be released and fully discharged against any property or assets of the
Company or any Restricted Subsidiary.
Indebtedness to Unrestricted Subsidiaries. The Company's covenant in
the Note Exchange Agreement not to make or permit any Restricted Subsidiary to
make any payment (including prepayments and purchases) in respect of
Indebtedness for borrowed money owing to and held by an Unrestricted Subsidiary
or a Restricted Subsidiary which is not a Wholly-owned Restricted Subsidiary
under specified circumstances is substantially identical to the corresponding
covenant in the Indenture, except that the Note Exchange Agreement also
prohibits the making of any such payment if, immediately before or after giving
effect to such payment, a Designated Event shall have occurred (other than a
Designated Event with respect to which all time periods for the holders of
Existing Notes to be prepaid as described under "Payment Provisions --
Designated Event" have expired). See "Description of New Notes -- Certain
Covenants -- Indebtedness to Unrestricted Subsidiaries".
Mergers and Acquisitions. The covenants set forth in the Indenture
and the Note Exchange Agreement which limit the ability of the Company or a
Restricted Subsidiary to merge or consolidate with or acquire the stock or
assets of any person are substantially identical, except that the Note Exchange
Agreement requires the Company to be the surviving or continuing corporation in
any such transaction involving the Company, whereas the Indenture permits the
Company to consolidate with or merge into another person if specified
requirements are met. See "Description of New Notes -- Certain Covenants --
Mergers and Acquisitions".
Sale of Assets. The covenants set forth in the Indenture and the Note
Exchange Agreement with respect to the sale, lease, transfer or other
disposition by the Company or any Restricted Subsidiary of any of its
properties and assets are substantially identical, except that the conditions
that must be satisfied in order for a trade or exchange of an asset or group of
assets to be effected in compliance with the Note Exchange Agreement include
the further requirement that, after giving effect to such transaction, there
shall not be a material and adverse effect on the Company and its Restricted
Subsidiaries with respect to the prospects for the future generation of Cash
Flow, Subscriber Penetration Levels (as defined in the Note Exchange
Agreement), the general mix of assets or the condition, quality and
developmental level of technical equipment. Notice of such trade or exchange
(including information equivalent to that required to be given to the Trustee
under the corresponding covenant of the Indenture) is required to be given to
each holder of Existing Notes. See "Description of New Notes -- Certain
Covenants -- Sale of Assets".
Certain Deliveries. In accordance with the Note Exchange Agreement,
the Company is required to deliver to each Designated Holder within 15 days
after it files them with the Commission copies of the annual reports and of the
information, documents and other reports which the Company is required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Further, within 120 days after the end of each fiscal year, the Company is
required to deliver to each Designated Holder a certificate of an appropriate
officer with respect to the Company's compliance with the conditions and
covenants contained in the Note Exchange Agreement and a written statement of
the Company's independent auditors with respect to whether, in connection with
their audit examination, any Event of Default has come to their attention. In
accordance with the Indenture, copies of such filings with the Commission, the
officer's compliance certificate and the written statement of the Company's
independent auditors
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are required to be delivered to the Trustee rather than the holders of the New
Notes. (Sections 4.04 and 4.06 of the Indenture)
CERTAIN ADDITIONAL COVENANTS
The Note Exchange Agreement provides that until the Existing Notes
have been paid in full in accordance with the terms thereof (and otherwise as
provided in the Note Exchange Agreement), the Company shall be subject to the
further covenants summarized below. None of the following covenants are
contained in the Indenture and, therefore, the benefits thereof will not be
available to the holders of New Notes.
Maintenance of Properties; Insurance. The Company and each Restricted
Subsidiary (i) shall maintain, preserve and keep its plant, properties and
equipment in good repair, working order and condition and will from time to
time make all repairs, renewals, replacements, additions and betterments, as
needed, so that the efficiency thereof shall be fully preserved and maintained,
except assets disposed of by the Company or any Restricted Subsidiary in the
ordinary course of business where such assets are obsolete or no longer useful
or required in the operation of the Company's or such Restricted Subsidiary's
business, and (ii) shall maintain insurance coverage by reputable insurance
companies or associations, in such forms and amounts and against such hazards
as are customary for companies engaged in similar businesses and owning and
operating similar properties.
Ownership of Restricted Subsidiaries. The Company shall at all times
own, directly or indirectly through a Wholly-owned Restricted Subsidiary, not
less than 80% of the issued and outstanding shares of capital stock of each
Restricted Subsidiary.
Payment of Taxes and Other Claims. Except as provided in the "Liens"
covenant, the Company will, and will cause each Restricted Subsidiary to pay
when due (i) all taxes, assessments, and other governmental charges or levies
imposed upon it or any of its or their respective properties or income, which,
if unpaid, might result in the creation of a Lien upon any of its or their
respective material properties, and (ii) all claims or demands for labor,
materials and supplies, which, if unpaid, might result in the creation of a
Lien upon any of its or their respective material properties.
ERISA. The Company shall deliver to any holder of Existing Notes:
(a) promptly and in any event within ten days after the Company knows or has
reason to know of the occurrence of (i) any of the events set forth in Section
4043(b) of ERISA, (ii) a withdrawal from a Plan described in Section 4063 of
ERISA, or (iii) a cessation of operations described in Section 4068(f) of ERISA
(each, a "Reportable Event"), with respect to a Plan, a copy of any materials
required to be filed with the Pension Benefit Guaranty Corporation with respect
to such Reportable Event together with a statement of an appropriate officer of
the Company setting forth details as to such Reportable Event and the action
which the Company proposes to take with respect thereto; (b) at least ten days
prior to the filing by any plan administrator of a Plan of a notice of intent
to terminate such Plan, a copy of such notice; (c) promptly and in any event
within ten days after the Company knows or has reason to know of any event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, a
statement of an appropriate officer of the Company describing such event or
condition; (d) promptly and in no event more than ten days after receipt
thereof by the Company or any ERISA Affiliate, each notice received by the
Company or an ERISA Affiliate concerning the imposition of any withdrawal
liability under Section 4202 of ERISA; and (e) promptly after receipt thereof,
a copy of any notice the Company or any ERISA Affiliate may receive from the
Pension Benefit Guaranty Corporation or the Internal Revenue Service with
respect to any Plan or Multi-employer Plan, provided, however, that this
covenant does not apply to notices of general application promulgated by the
Pension Benefit Guaranty Corporation or the Internal Revenue Service.
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DEFAULTS AND REMEDIES
The events which constitute an Event of Default under the Note
Exchange Agreement and the Indenture are substantially similar except as
described below. Under the Note Exchange Agreement, if the Company defaults in
the payment or prepayment of principal or premium on any Existing Note of any
series when the same shall become due, or defaults in the payment or prepayment
of any interest on any Existing Note of any series when the same shall become
due and such default as to interest remains unremedied for five days, such
event will constitute an Event of Default with respect to the Existing Notes of
all series. Under the Indenture, such event would constitute an Event of
Default only with respect to the New Notes of the particular series with
respect to which the payment default occurred. Both the Indenture and the Note
Exchange Agreement, however, include cross-default provisions in the event of a
failure to pay any principal of, or premium or interest on, any Indebtedness
having a then outstanding aggregate principal amount of $10,000,000 or more,
beyond any applicable grace period. The Note Exchange Agreement provides that
the Company's failure to perform any of the requirements of certain of the
affirmative covenants made in the Note Exchange Agreement (relating to the
designation of Restricted and Unrestricted Subsidiaries, the ratable securing
of the Existing Notes, the ownership of Restricted Subsidiaries and the giving
of notice of defaults by the Company), and the Company's failure to comply with
any of the negative covenants contained therein, will constitute an Event of
Default with respect to the Existing Notes without any requirement of notice to
the Company or passage of time. The failure to perform or observe any other
term or condition of the Note Exchange Agreement or of any of the Existing
Notes will constitute an Event of Default if not remedied within 30 days after
such failure shall have become known to the Company. See "Description of New
Notes -- Defaults and Remedies". The periods of time that certain events or
conditions (relating to the involuntary appointment of a custodian or receiver;
an involuntary bankruptcy, reorganization or similar proceeding; entry of a
decree of dissolution, and entry of final judgments exceeding a specified
aggregate amount) would have to continue unremedied (by dismissal, stay or
discharge) before an Event of Default would occur under the Note Exchange
Agreement or the Indenture is more than 60 days, in the case of the Note
Exchange Agreement, and more than 90 days, in the case of the Indenture. Under
the Indenture, the occurrence of certain events or conditions with respect to a
Plan or a Multi-employer Plan will constitute an Event of Default if such
events or conditions would result in liabilities in excess of certain amounts
and that are not covered in full by insurance. Under the Note Exchange
Agreement, if such events or conditions occur with respect to the Company, as
opposed to a Restricted Subsidiary, an Event of Default will occur without
regard to the amount of the liabilities or their coverage by insurance.
Further, the Note Exchange Agreement provides that it shall be an Event of
Default with respect to the Existing Notes if an order, judgment or decree is
entered in any proceeding against the Company or any Restricted Subsidiary
decreeing a split-up of the Company or any Restricted Subsidiary which requires
the divestiture of assets of the Company or any Restricted Subsidiary the
Annualized Cash Flows of which for the three-month period ending the month
immediately prior to the date of such order, judgment or decree shall have
contributed 15% or more of the Annualized Cash Flow of the Company and the
Restricted Subsidiaries for the same period, and such order, judgment or decree
remains unstayed and in effect for more than 60 days, unless the Company can
demonstrate, to the reasonable satisfaction of a Majority-in-Interest of
Holders of Existing Notes, that it could make any such asset divestitures
within the time period required in order to comply with such order, judgment or
decree without violating any of the terms and conditions of the Note Exchange
Agreement. The Indenture does not include an equivalent provision.
If an Event of Default (other than certain events of bankruptcy or
insolvency) occurs with respect to outstanding Existing Notes, the Note
Exchange Agreement provides that a Majority-in-Interest of Holders of the
Existing Notes may declare to be due and payable immediately the unpaid
principal amount of all of the Existing Notes then outstanding and accrued
interest thereon. The Note Exchange Agreement provides for automatic
acceleration of such amounts upon the occurrence of certain events of
bankruptcy or insolvency. If an Event of Default occurs by virtue of the
Company's failure to make any payment of principal, premium or interest on any
Existing Note when due, then any holder of an Existing Note as to which such
default in payment has occurred and is continuing may at its option declare the
unpaid principal amount of, and accrued interest on, such Existing Note to be
due and payable immediately. The acceleration provisions of the Indenture are
substantially similar, except that (i) if a payment default occurs with respect
to any New Note of a series, a Majority-in-Interest of Holders of the New Notes
of that particular series may declare the same to be due and payable and no
individual holder has the
53
<PAGE> 56
separate right to accelerate the payment of his or its New Note, and (ii) in
addition to providing for the automatic acceleration of the payment of the New
Notes upon the occurrence of certain events of bankruptcy or insolvency, the
Indenture provides for such automatic acceleration if an order, judgment or
decree is entered in any proceedings against the Company or a Restricted
Subsidiary decreeing the dissolution of the Company or such Restricted
Subsidiary and such order, judgment or decree remains unstayed and in effect
for more than 90 days. Upon the acceleration of New Notes or Existing Notes
(other than an automatic acceleration), the Indenture and the Note Exchange
Agreement, respectively, provide for the payment of a premium in addition to
principal and interest. The Note Exchange Agreement, subject to certain
conditions, permits the holders of not less than 66 2/3% in aggregate principal
amount of the Existing Notes then outstanding to annul any declaration of
acceleration of Existing Notes and the consequences thereof, provided that such
annulment occurs within six months after such declaration. The Indenture,
subject to similar conditions, permits the holders of not less than 66 2/3% in
aggregate unpaid principal amount of the outstanding New Notes (or the New
Notes of a particular series in the case of an acceleration of New Notes of
that series following a payment default with respect to such series) to rescind
an acceleration and its consequences with respect to the New Notes at any time.
See "Description of New Notes -- Defaults and Remedies". In accordance with
the Indenture, no holder of New Notes shall have the right to pursue any remedy
with respect to the Indenture or the New Notes (other than a suit for
enforcement of any payment on such holder's New Notes that has not been paid
when due), unless certain conditions are met, including that the holders of at
least 25% in aggregate unpaid principal amount of the outstanding Notes make a
written request to the Trustee to pursue the remedy and offer and provide to
the Trustee indemnity satisfactory to it against any loss, liability or expense
and that the Trustee does not comply with such request within 60 days
thereafter. (Sections 5.06 and 5.07) The Note Exchange Agreement does not
include any equivalent limitation on the rights of holders of Existing Notes.
AMENDMENTS AND WAIVERS
The Note Exchange Agreement and the Indenture may each be amended, and
compliance with the respective provisions thereof may be waived, with the
consent of a Majority-in-Interest of Holders of the Existing Notes or the New
Notes, as applicable, subject to certain exceptions which are substantially
similar, except that the Note Exchange Agreement further provides that no
amendment or waiver consented to after the acceleration of any Existing Note or
Notes shall, without the consent of the holder thereof, affect the rights of
the holder of such accelerated Existing Note, including the right to receive
immediate payment of all unpaid principal, premium, if any, and interest
thereon. The Indenture provides that no waiver of a default in the payment of
principal of, premium, if any, or interest on a New Note will be effective
without the consent of the holder of such New Note. The Indenture provides
that the Company and the Trustee may amend or supplement the Indenture in
certain respects without the consent of any holder of New Notes. The Note
Exchange Act does not include any equivalent provision. The Note Exchange
Agreement prohibits the Company from soliciting, requesting or negotiating for
or with respect to any proposed waiver or amendment unless each holder of
Existing Notes is afforded the opportunity of considering the same and further
prohibits the Company from paying any remuneration to any holder of Existing
Notes as consideration for or as an inducement to the entering into by such
holder of any waiver or amendment, unless such remuneration is concurrently
paid, on the same terms, ratably to the holders of all of the Existing Notes
then outstanding. The Indenture does not contain an equivalent provision. See
"Description of New Notes -- Amendments, Supplements and Waivers" and "--
Defaults and Remedies".
TERMINATION OF COMPANY'S OBLIGATIONS
The Note Exchange Agreement does not contain any provision equivalent
to the provision of the Indenture described under "Description of New Notes --
Termination of Company's Obligations".
LEGAL MATTERS
Certain legal matters with respect to the New Notes offered hereby
will be passed upon for the Company by Baker & Botts, L.L.P., 885 Third Avenue,
New York, New York 10022-4834. Jerome H. Kern, a partner of
54
<PAGE> 57
Baker & Botts, L.L.P., is a director of the Company and certain partners of
Baker & Botts, L.L.P. serve as Assistant Secretaries of the Company.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1993, and the related
financial statement schedules, which appear in Tele-Communications, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993, have been
incorporated by reference herein in reliance upon the reports, dated March 21,
1994, of KPMG Peat Marwick, independent auditors, incorporated by reference
herein, and upon the authority of said firm as experts in auditing and
accounting.
The consolidated balance sheets of Liberty Media Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 1993 and 1992 and the period from April 1, 1991 to December
31, 1991 and the consolidated statements of operations, stockholders' equity,
and cash flows of "Liberty Media" (a combination of certain programming
interests and cable television assets of Tele-Communications, Inc.) for the
period from January 1, 1991 to March 31, 1991, which appear in
Tele-Communications, Inc.'s Current Report on Form 8-K dated April 6, 1994,
have been incorporated by reference herein in reliance upon the report, dated
March 18, 1994, of KPMG Peat Marwick, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in auditing
and accounting.
55
<PAGE> 58
<TABLE>
=================================================== ===================================================
<S> <C>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL
HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED
BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
NEW NOTES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER TELE-COMMUNICATIONS, INC.
OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, $5,000,000
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION 9.55% SENIOR NOTES, SERIES A
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS DUE DECEMBER 15, 2001
SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF. $26,500,00
8.67% SENIOR NOTES, SERIES B
DUE AUGUST 31, 2002
--------------------
$36,000,00
8.85% SENIOR NOTES, SERIES C
TABLE OF CONTENTS DUE AUGUST 31, 2002
Page
$32,000,00
Available Information . . . . . . . . . . . . . . 9.82% SENIOR NOTES, SERIES D
Incorporation of Documents by DUE SEPTEMBER 30, 1997
Reference . . . . . . . . . . . . . . . . . .
Summary . . . . . . . . . . . . . . . . . . . . . $20,000,00
Certain Considerations . . . . . . . . . . . . . 10.25% SENIOR NOTES, SERIES E
The Company . . . . . . . . . . . . . . . . . . . DUE SEPTEMBER 30, 2000
Recent Developments . . . . . . . . . . . . . . .
The Exchange Offer . . . . . . . . . . . . . . .
Certain Federal Income Tax Considerations . . --------------------
Description of New Notes . . . . . . . . . . . . PROSPECTUS
Comparison of Existing Notes and --------------------
New Notes . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . .
MAY __, 1994
=================================================== ===================================================
</TABLE>
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides,
generally, that a corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any suit or proceeding
(except actions by or in the right of the corporation) by reason of the fact
that such person is or was a director or officer of the corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may similarly indemnify such person for expenses
actually and reasonably incurred by him in connection with the defense or
settlement of any action or suit by or in the right of the corporation,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, in the
case of claims, issues and matters as to which such person shall have been
adjudged liable to the corporation, provided that a court shall have
determined, upon application, that, despite the adjudication of liability but
in view of all of the facts and circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under section 174 of Title 8, or (iv) for any transaction from which the
director derived an improper personal benefit. No such provision may eliminate
or limit the liability of a director for any act or omission occurring prior to
the date when such provision becomes effective.
Article V, Paragraph FOURTH of the Company's Restated Certificate of
Incorporation provides as follows:
"FOURTH: (A) To the fullest extent permitted by the
Delaware General Corporation Law as the same exists or may
hereafter be amended, a director of this corporation shall not
be liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
(B) This corporation shall, to the fullest extent
permitted by, and in the manner permissible under, the laws of
the State of Delaware, (i) indemnify, and (ii) advance
litigation expenses prior to the final disposition of an
action, to any person made or threatened to be made a party to
an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he
or she is or was a director or officer of this corporation or
served any other enterprise as a director or officer at the
request of this corporation and such rights of indemnification
and to advancement of litigation expenses shall also be
applicable to the heirs, executors, administrators and other
similar legal representatives of any such director or officer.
(C) The foregoing provisions of this paragraph
FOURTH shall be deemed to be a contract between this
corporation and each director and officer who serves in such
capacity at any time while this paragraph FOURTH is in effect,
and any repeal or modification thereof shall not
II-1
<PAGE> 60
affect any rights or obligations then or theretofore existing
or any action, suit or proceeding theretofore or thereafter
brought based in whole or in part upon any such state of
facts.
(D) The foregoing rights of indemnification and to
advancement of litigation expenses shall not be deemed
exclusive of any other rights to which any director or officer
or his or her legal representatives may be entitled apart from
the provisions of this paragraph FOURTH."
Article IV, Section 6 of the Company's By-laws also contains an
indemnity provision, requiring the Company to indemnify members of the Board of
Directors and officers of the Company and their respective heirs, personal
representatives and successors in interest, to the extent provided by the
Delaware Corporation statutes and by the Company's Restated Certificate of
Incorporation.
The Company has also entered into indemnification agreements with each
of its directors (each director, an "indemnitee"). The indemnification
agreements provide (i) for the prompt indemnification to the fullest extent
permitted by law against any and all expenses, including attorneys' fees and
all other costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness or participating in (including on
appeal), or in preparing for ("Expenses"), any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation ("Claim"), related
to the fact that such indemnitee is or was a director, officer, employee, agent
or fiduciary of the Company or is or was serving at the Company's request as a
director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by a director or officer
in any such capacity, and against any and all judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of any Claim, unless the
Reviewing Party (one or more members of the Board of Directors or other person
appointed by the Board of Directors, who is not a party to the particular
claim, or independent legal counsel) determines that such indemnification is
not permitted under applicable law and (ii) for the prompt advancement of
Expenses, and for reimbursement to the Company if the Reviewing Party
determines that such indemnitee is not entitled to such indemnification under
applicable law. In addition, the indemnification agreements provide (i) a
mechanism through which an indemnitee may seek court relief in the event the
Reviewing Party determines that the indemnitee would not be permitted to be
indemnified under applicable law (and therefore is not entitled to
indemnification or expense advancement under the indemnification agreement) and
(ii) indemnification against all expenses (including attorneys' fees), and
advancement thereof if requested, incurred by the indemnitee in seeking to
collect an indemnity claim or advancement of expenses from the Company or
incurred in seeking to recover under a directors' and officers' liability
insurance policy, regardless of whether successful or not. Furthermore, the
indemnification agreements provide that after there has been a "change in
control" of the Company (as defined in the indemnification agreements), other
than a change in control approved by a majority of directors who were directors
prior to such change, then, with respect to all determinations regarding a
right to indemnity and the right to advancement of Expenses, the Company will
seek legal advice only from independent legal counsel selected by the
indemnitee and approved by the Company.
The indemnification agreements impose upon the Company the burden of
proving that an indemnitee is not entitled to indemnification in any particular
case and negate certain presumptions that may otherwise be drawn against an
indemnitee seeking indemnification in connection with the termination of
actions in certain circumstances. Indemnitees' rights under the
indemnification agreements are not exclusive of any other rights they may have
under the Delaware General Corporation Law, the Company's By-laws or otherwise.
Although not requiring the maintenance of directors' and officers' liability
insurance, the indemnification agreements require that indemnitees be provided
with the maximum coverage available for any director or officer of the Company
if there is such a policy.
The Company may purchase liability insurance policies covering its
directors and officers.
II-2
<PAGE> 61
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Exhibit
Number Description
------- -----------
3.1 Registrant's Restated Certificate of Incorporation, dated July
19, 1979, as amended on June 12, 1980, June 18, 1981, June 9,
1983, May 20, 1986, June 12, 1987, January 14, 1988, November
4, 1991, December 2, 1991, December 2, 1991, December 27,
1991, April 3, 1992, February 8, 1993, March 19, 1993 and July
23, 1993. (Incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993. Commission File No. 0-5550.)
3.2 Registrant's By-Laws, as Amended and Restated July 19, 1979,
with amendments April 8, 1980, October 29, 1987 and December
10, 1993. (Incorporated herein by reference to the
Registrant's Current Report on Form 8-K dated April 6, 1994.
Commission File No. 0-5550.)
4.1 Indenture, dated as of April 15, 1994, between the Registrant
and The Bank of New York, as Trustee.
4.2 Form of 9.55% Senior Note, Series A (included as Exhibit A to
Exhibit 4.1).*
4.3 Form of 8.67% Senior Note, Series B (included as Exhibit B to
Exhibit 4.1).*
4.4 Form of 8.85% Senior Note, Series C (included as Exhibit C to
Exhibit 4.1).*
4.5 Form of 9.82% Senior Note, Series D (included as Exhibit D to
Exhibit 4.1).*
4.6 Form of 10.25% Senior Note, Series E (included as Exhibit E to
Exhibit 4.1).*
5 Opinion of Baker & Botts, L.L.P., regarding the legality of
the New Notes.
8 Opinion of Sherman & Howard, regarding certain tax matters.
12 Calculation of Ratios of Earnings to Fixed Charges.
21 List of Subsidiaries of the Registrant. (Incorporated herein
by reference to Exhibit 21 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993. Commission
File No. 0-5550.)
23.1 Consent of KPMG Peat Marwick.
23.2 Consent of KPMG Peat Marwick.
23.4 Consent of Baker & Botts, L.L.P. (included in Exhibit 5).
23.5 Consent of Sherman & Howard (included in Exhibit 8).
24 Power of Attorney.*
II-3
<PAGE> 62
Exhibit
Number Description
------- -----------
25 Statement of Eligibility of The Bank of New York, as Trustee,
on Form T-1.*
____________________
* Previously filed.
(b) Financial Statement Schedules.
Schedule II - Amounts Receivable from Related Parties
and Employees Other Than Related Parties,
Years ended December 31, 1993, 1992 and 1991*
Schedule III - Condensed Information as to the
Financial Position of the Registrant, December 31, 1993
and 1992; Condensed Information as to the Operations and
Cash Flows of the Registrant,
Years ended December 31, 1993, 1992 and 1991*
Schedule V - Property and Equipment,
Years ended December 31, 1993, 1992 and 1991*
Schedule VI - Accumulated Depreciation of
Property and Equipment,
Years ended December 31, 1993, 1992 and 1991*
Schedule VII - Guarantees of Securities of Other Issuers,
December 31, 1993*
Schedule VIII - Valuation and Qualifying Accounts,
Years ended December 31, 1993, 1992 and 1991*
Schedule IX - Short-Term Borrowings,
Years ended December 31, 1993, 1992 and 1991*
Schedule X - Supplementary Statement of
Operations Information,
Years ended December 31, 1993, 1992 and 1991*
_____________________
* Incorporated herein by reference to the same
schedule included as part of the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993 (Commission File No. 0-5550).
II-4
<PAGE> 63
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement; provided, however,
that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post- effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(5) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to Item 4,
10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 64
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF GREENWOOD VILLAGE, STATE OF COLORADO, ON MAY 23, 1994.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
Name: Stephen M. Brett
Title: Senior Vice President
II-6
<PAGE> 65
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board May 23, 1994
(Bob Magness) and Director
* President and Director May 23, 1994
(John C. Malone) (Principal Executive Officer)
* Executive Vice President May 23, 1994
(Donne F. Fisher) and Director
(Principal Financial Officer)
* Senior Vice President May 23, 1994
(Gary K. Bracken) and Controller
(Principal Accounting Officer)
* Director May 23, 1994
(Jerome H. Kern)
* Director May 23, 1994
(John W. Gallivan)
* Director May 23, 1994
(Kim Magness)
* By: /s/Stephen M. Brett
Stephen M. Brett
Attorney-in-Fact
</TABLE>
II-7
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<Caption
Exhibit
Number Exhibit Page No.
- ------- ------- --------
<S> <C>
3.1 Registrant's Restated Certificate of Incorporation, dated July
19, 1979, as amended on June 12, 1980, June 18, 1981, June 9,
1983, May 20, 1986, June 12, 1987, January 14, 1988, November
4, 1991, December 2, 1991, December 2, 1991, December 27,
1991, April 3, 1992, February 8, 1993, March 19, 1993 and July
23, 1993. (Incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993. Commission File No. 0-5550.)
3.2 Registrant's By-Laws, as Amended and Restated July 19, 1979,
with amendments April 8, 1980, October 29, 1987 and December
10, 1993. (Incorporated herein by reference to the
Registrant's Current Report on Form 8-K dated April 6, 1994.
Commission File No. 0-5550.)
4.1 Indenture, dated as of April 15, 1994, between the Registrant
and The Bank of New York, as Trustee.
4.2 Form of 9.55% Senior Note, Series A (included as Exhibit A to
Exhibit 4.1).*
4.3 Form of 8.67% Senior Note, Series B (included as Exhibit B to
Exhibit 4.1).*
4.4 Form of 8.85% Senior Note, Series C (included as Exhibit C to
Exhibit 4.1).*
4.5 Form of 9.82% Senior Note, Series D (included as Exhibit D to
Exhibit 4.1).*
4.6 Form of 10.25% Senior Note, Series E (included as Exhibit E to
Exhibit 4.1).*
5 Opinion of Baker & Botts, L.L.P., regarding the legality of
the New Notes.
8 Opinion of Sherman & Howard, regarding certain tax matters.
12 Calculation of Ratios of Earnings to Fixed Charges.
21 List of Subsidiaries of the Registrant. (Incorporated herein
by reference to Exhibit 21 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993. Commission
File No. 0-5550.)
23.1 Consent of KPMG Peat Marwick.
23.2 Consent of KPMG Peat Marwick.
23.4 Consent of Baker & Botts, L.L.P. (included in Exhibit 5).
23.5 Consent of Sherman & Howard (included in Exhibit 8).
24 Power of Attorney.*
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page No.
- ------- ------- --------
<S> <C>
25 Statement of Eligibility of The Bank of New York, as Trustee,
on Form T-1.*
</TABLE>
____________________
* Previously filed.
<PAGE> 1
EXHIBIT 4.1
<PAGE> 2
TELE-COMMUNICATIONS, INC.
AND
THE BANK OF NEW YORK
TRUSTEE
INDENTURE
Dated as of April 15, 1994
SECURITIES
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I.
Definitions and Incorporation by Reference
1.01 Definitions 1
1.02 Other Definitions. 14
1.03 Incorporation by Reference of Trust Indenture Act. 14
1.04 Rules of Construction 15
ARTICLE II.
The Notes
2.01 Forms Generally and Dating 15
2.02 Execution and Authentication; Denominations 15
2.03 Registrar and Paying Agent 16
2.04 Paying Agent to Hold Money in Trust 17
2.05 Noteholder Lists 17
2.06 Transfer and Exchange 17
2.07 Replacement Notes 18
2.08 Temporary Notes 19
2.09 Cancellation 19
2.10 Payment of Interest; Defaulted Interest 19
2.11 Persons Deemed Owners 20
ARTICLE III.
Prepayment, Redemption and Purchase
3.01 Optional Prepayment 20
3.02 Optional Redemption of Non-Consenting Notes 22
3.03 Notices to Trustee and Holders With Respect to Optional Prepayments 23
3.04 Notices to Trustee and Holders With Respect to Redemption 25
3.05 Effect of Notice of Prepayment or Redemption 27
3.06 Deposit of Prepayment Price or Redemption Price 27
3.07 Notes Prepaid in Part 27
3.08 Change of Control 27
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IV.
Covenants
4.01 Payment of Notes 30
4.02 Interest on Overdue Amounts 30
4.03 Designation of Restricted Subsidiaries 30
4.04 SEC Reports 31
4.05 Corporate Existence 31
4.06 Compliance Certificate 31
4.07 Debt Service Test 32
4.08 Restricted Payments; Other Payment Limitations 32
4.09 Loan and Investment Limitations 33
4.10 Liens 35
4.11 Indebtedness 36
4.12 Indebtedness to Unrestricted Subsidiaries 38
4.13 Mergers and Acquisitions 38
4.14 Sale of Assets 39
4.15 Sale or Discount of Receivables 42
4.16 Limitation on Other Business 42
4.17 ERISA 42
4.18 Consolidated Tax Returns 42
4.19 Disposition of Stock and Indebtedness of Restricted Subsidiaries 42
4.20 Transactions With Affiliates 43
4.21 Waiver of Certain Covenants 43
4.22 No Lien Created 44
ARTICLE V.
Defaults and Remedies
5.01 Events of Default 44
5.02 Acceleration 46
5.03 Other Remedies 46
5.04 Waiver of Existing Defaults 47
5.05 Control by Majority 47
5.06 Limitation on Suits 47
5.07 Rights of Holders to Receive Payment 47
5.08 Collection Suit by Trustee 48
5.09 Trustee May File Proofs of Claim 48
5.10 Priorities 48
5.11 Undertaking for Costs 48
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE VI.
Trustee
6.01 Duties of Trustee 49
6.02 Rights of Trustee 50
6.03 Individual Rights of Trustee 50
6.04 Trustee's Disclaimer 50
6.05 Notice of Defaults 51
6.06 Reports by Trustee to Holders 51
6.07 Compensation and Indemnity 51
6.08 Replacement of Trustee 52
6.09 Successor Trustee by Merger, etc. 53
6.10 Eligibility; Disqualification 53
6.11 Preferential Collection of Claims Against Company 53
ARTICLE VII.
Discharge of Indenture
7.01 Termination of Company's Obligations 53
7.02 Application of Trust Fund 54
7.03 Repayment to Company 55
7.04 Reinstatement 55
ARTICLE VIII.
Amendments, Supplements and Waivers
8.01 Without Consent of Holders 55
8.02 With Consent of Holders 56
8.03 Compliance with Trust Indenture Act 57
8.04 Effect of Amendments and Supplements 57
8.05 Notation on or Exchange of Notes 57
8.06 Trustee to Sign Amendments, etc 58
ARTICLE IX.
Miscellaneous
9.01 Trust Indenture Act Controls 58
9.02 Notices 58
9.03 Communication by Holders with Other Holders 59
9.04 Certificate and Opinion as to Conditions Precedent 59
9.05 Statements Required in Certificate or Opinion 60
9.06 When Treasury Notes Disregarded 60
9.07 Rules by Trustee and Agents 60
9.08 Legal Holidays 60
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C>
9.09 Governing Law 61
9.10 No Adverse Interpretation of Other Agreements 61
9.11 No Recourse Against Others 61
9.12 Successors 61
9.13 Duplicate Originals 61
9.14 Table of Contents, Headings, etc. 61
9.15 Acts of Holders 61
List of Exhibits
- ----------------
Form of Series A Note - A
Form of Series B Note - B
Form of Series C Note - C
Form of Series D Note - D
Form of Series E Note - E
Outstanding Investments - F
Existing Liens - G
</TABLE>
iv
<PAGE> 7
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
<S> <C> <C>
310 (a)(1) 6.10
(a)(2) 6.10
(a)(3) N.A.
(a)(4) N.A.
(b) 6.08; 6.10; 9.02
(c) N.A.
311 (a) 6.11
(b) 6.11
(c) N.A.
312 (a) 2.05
(b) 9.03
(c) 9.03
313 (a) 6.06
(b)(1) N.A.
(b)(2) 6.06
(c) 9.02
(d) 6.06
314 (a) 4.04; 9.02
(b) N.A.
(c)(1) 9.04
(c)(2) 9.04
(c)(3) N.A.
(d) N.A.
(e) 9.05
(f) N.A.
315 (a) 6.01(b)
(b) 6.05; 9.02
(c) 6.01(a)
(d) 6.01(c)
(e) 5.11
316 (a)(last sentence) 9.06
(a)(1)(A) 5.05
(a)(1)(B) 5.04
(a)(2) N.A.
(b) 5.07
317 (a)(1) 5.08
(a)(2) 5.09
(b) 2.04
318 (a) 9.01
</TABLE>
N.A. means Not Applicable.
v
<PAGE> 8
INDENTURE dated as of April 15, 1994, between TELE-COMMUNICATIONS,
INC., a Delaware corporation ("Company"), and THE BANK OF NEW YORK, a New York
banking corporation ("Trustee").
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Company's 9.55%
Senior Notes, Series A, due December 15, 2001 (the "Series A Notes"), 8.67%
Senior Notes, Series B, due August 31, 2002 (the "Series B Notes"), 8.85%
Senior Notes, Series C, due August 31, 2002 (the "Series C Notes"), 9.82%
Senior Notes, Series D, due September 30, 1997 (the "Series D Notes"), and
10.25% Senior Notes, Series E, due September 30, 2000 (the "Series E Notes")
(the Series A Notes, Series B Notes, Series C Notes, Series D Notes and Series
E Notes are sometimes referred to collectively herein as the "Notes").
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
Accumulated Funding Deficiency means a funding deficiency described in
Section 302 of ERISA.
Affiliate of any person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person. A person shall be deemed to control a corporation if such person
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
Agent means any Registrar, Paying Agent or co-Registrar. See Section
2.03.
Annualized Cash Flow means, as of any date of determination, the
product of (i) Cash Flow for the fiscal quarter ending on such date or most
recently ended prior to such date, or as the context may require, Cash Flow for
the three-month period ending the month immediately preceding such date,
multiplied by (ii) four. The determination of Annualized Cash Flow of the
Company and its Restricted Subsidiaries shall be made on a consolidated basis.
Approved Subordinated Debt means and includes, as of any date as of
which the amount thereof is to be determined, Subordinated Debt of the Company
in the aggregate principal amount of $441,000 issued pursuant to the Indenture,
dated as of September 29, 1988, as amended, between the Company and National
Westminster Bank USA, as Trustee, but no extensions, renewals or refinancings
thereof, having those subordination terms contained in said Indenture as in
effect on the date hereof.
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<PAGE> 9
Basic Discount Rate means, with respect to the Notes of any series, a
rate equal to (i) the Treasury Yield with respect to the Notes of such series
plus (ii) 50 basis points.
Board of Directors means the Board of Directors of the Company or any
authorized committee thereof.
Business Day means any day that is not a Legal Holiday.
CATV Business of any person means the business of owning a CATV System
or Systems and related communications activities.
CATV Systems means all cable television facilities which are operated
and maintained by the Company or a Subsidiary pursuant to the terms of the
related licenses, franchises and permits issued under federal, state or
municipal laws from time to time in effect which authorize a person to receive
or distribute, or both, by cable or otherwise, audio and visual signals within
a defined geographical area for the purpose of providing entertainment or other
services, together with all the property, tangible and intangible, owned or
used in connection with the services provided pursuant to said licenses,
franchises and permits, and each other cable television facility from time to
time operated by the Company and its Subsidiaries. A CATV System means one of
such Systems.
Capitalized Leases means all leases which contain Capitalized Lease
Obligations.
Capitalized Lease Obligations means all rental obligations which, in
accordance with generally accepted accounting principles, are or will be
required to be capitalized on the books of the Company or any Subsidiary, in
each case taking as the amount thereof the amount which would be treated as
Indebtedness (net of interest expense) in accordance with such principles.
Cash Flow means, for any period for which the amount thereof is to be
determined, (a) the sum of (i) Net Income, plus (ii) interest, depreciation and
amortization, deferred taxes and other non-cash charges (to the extent deducted
in determining Net Income) to income of the Company and its Restricted
Subsidiaries for such period, less (b) deferred taxes or other non-cash items
which are a non-cash contribution to Net Income, excluding in each case all
non-recurring items. Cash Flow of the Company and its Restricted Subsidiaries
shall be determined, for any period for which the amount thereof is to be
determined, after giving effect to acquisitions and dispositions of assets of
the Company or any of the Restricted Subsidiaries (and designations of
Restricted Subsidiaries and Unrestricted Subsidiaries pursuant to Section 4.03)
during such period as if such transactions had occurred on the first day of
such period.
Change of Control means the acquisition by any person (other than the
Company, any Subsidiary, any employee stock ownership plan or other employee
benefit plan of the Company or any Subsidiary, or any Controlling Person)
during any period of twelve (12) consecutive months of beneficial ownership of
shares of the Common Stock or Class B Stock or both of the Company representing
in the aggregate thirty percent (30%) or more of the combined voting
2
<PAGE> 10
power of all shares of the Company's Common Stock and Class B Stock, calculated
on a fully diluted basis as of the date immediately prior to the date of such
acquisition (or, if there be more than one acquisition during such twelve-month
period, the date of the last such acquisition); provided, however, that
notwithstanding the foregoing no Change of Control shall be deemed to have
occurred if and for so long as the shares of the Common Stock and Class B Stock
of the Company beneficially owned by the Controlling Persons represent in the
aggregate 30% or more of the combined voting power of all shares of the
Company's Common Stock and Class B Stock calculated on a fully diluted basis.
Class B Stock means the Class B Common Stock, $1.00 par value, of the
Company as it exists on the date of this Indenture and stock of any other class
into which such Class B Common Stock may thereafter have been changed.
Code means the Internal Revenue Code of 1986, as amended. Any
reference herein to any specific Code Section shall refer to such new or
analogous section should such section be modified, amended or replaced.
Common Stock means the Class A Common Stock, $1.00 par value, of the
Company as it exists on the date of this Indenture and stock of any other class
into which such Class A Common Stock may thereafter have been changed.
Company means the party named as such in this Indenture until a
successor replaces it pursuant to the applicable provisions of this Indenture
and thereafter means the successor.
Consolidated or consolidated, when used with reference to any financial
term in this Indenture (but not when used with respect to any tax return or tax
liability), means the aggregate for two or more persons of the amounts
signified by such term for all such persons, with intercompany items eliminated
and, with respect to earnings, after eliminating the portion of earnings
properly attributable to minority interests, if any, in the capital stock of
any such person.
Consolidated Net Earnings of the Company and its Restricted
Subsidiaries means, for any period for which the amount thereof is to be
determined, the consolidated net earnings of the Company and its Restricted
Subsidiaries as reported in the Company's most recent regularly prepared
financial statement, and for any interim period for which no such statement,
report or document has been filed and is available, the consolidated net
earnings of the Company and its Restricted Subsidiaries for such period
determined in accordance with generally accepted accounting principles
consistently applied, prepared by the Company in a manner consistent with past
practices.
Controlling Person means each of (1) the Chairman of the Board of the
Company as of the date of this Indenture, (2) the President of the Company as
of the date of this Indenture, (3) each of the directors of the Company as of
the date of this Indenture, (4) the respective family members, estates and
heirs of each of the persons referred to in clauses (1) through (3) above and
any trust or other investment vehicle for the primary benefit of any of such
persons or their
3
<PAGE> 11
respective family members or heirs, (5) Kearns-Tribune Corporation, a Delaware
corporation or any successor thereto by merger or consolidation and (6) the
trustee under the Company's Employee Stock Purchase Plan or any successor plan.
As used with respect to any person, the term "family member" means the spouse,
siblings and lineal descendants of such person. The trustee under the Company's
Employee Stock Purchase Plan or any successor plan shall be deemed to have
beneficial ownership of all shares of common stock of the Company held under
the plan, whether or not allocated to or vested in participants' accounts.
Debt Service of the Company and its Restricted Subsidiaries means, for
any period for which the amount thereof is to be determined, the sum of (i) all
interest paid or payable, and if floating interest obligations are involved,
interest at the rate in effect at the time of calculation, plus all amounts of
principal required to be paid during such period in respect of the Notes, any
other then outstanding Short- Term Debt or Funded Debt (excluding, however, the
principal amount of any Renewable Indebtedness or Refundable Indebtedness
included in Funded Debt, as set forth in the definition of "Funded Debt"
herein), together with the aggregate amounts of all payments required to be
made by the Company or any of its Restricted Subsidiaries during such period to
obtain or effect the satisfaction or discharge of, or to acquire, the Notes, or
any of such other Short-Term Debt or Funded Debt, provided that for purposes of
this Indenture, (a) the determination of amounts payable in respect of such
Funded Debt or Short-Term Debt relating to any Minority Interest shall be made
by reference to any mandatory schedule for the retirement or redemption of such
Minority Interest, or if the Company or any Restricted Subsidiary is a party to
any repurchase or other agreement pursuant to which it is obligated, at the
option of the holder(s) thereof, to repurchase, redeem, retire or otherwise
acquire any Minority Interest or part thereof, as of the first date on which
such option may be exercised (whether or not in fact exercised), the amount
payable in respect of such Minority Interest shall be the full amount of the
Company's or such Restricted Subsidiary's obligations thereunder, and (b) the
determination of amounts payable in respect of Funded Debt or Short-Term Debt
of the Company or any Restricted Subsidiary consisting of unfunded pension
liabilities shall be made in accordance with the funding standard account
entitled "Amortization of Unfunded Past Service Liabilities" set forth in
Section 412(b)(2)B(ii) of the Code, and (ii) the aggregate amount of all
payments required to be made during such period by such person (determined as
if such person were called upon to perform such Guaranties under the terms of
the mandatory payment provisions of the underlying obligation, without giving
effect to any possible acceleration of such obligation) pursuant to, or to
obtain or effect the discharge of, such person's obligations under any Guaranty
during such period.
Default means any of the events specified in Section 5.01, whether or
not any requirement in connection with such event for the giving of notice, or
the lapse of time, or the happening of any further condition, event or act has
been satisfied.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended. Any reference herein to any specific ERISA section or form shall
refer to such new or analogous section or form should such section or form be
modified, amended or replaced.
4
<PAGE> 12
ERISA Affiliate means each trade or business, including the Company,
whether or not incorporated, which together with the Company would be treated
as a single employer under Section 4001(a)(14) of ERISA.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations issued thereunder, as from time to time in effect.
Funded Debt of any person means and includes, as of any date as of
which the amount thereof is to be determined, without duplication (i) all
Indebtedness of such person for borrowed money, any Guaranty by such person of
Indebtedness for borrowed money and any Capitalized Lease Obligation of such
person, whether secured or unsecured, which by its terms has a final maturity,
duration or payment date more than one year from the date of determination
thereof (including, without limitation, (x) any balance of Indebtedness which
was Funded Debt at the time of its creation maturing within one year from the
date of determination, and (y) any Indebtedness of such person for borrowed
money having a final maturity, duration or payment date within one year from
such date of determination, which, pursuant to the terms of a revolving credit
or similar agreement or otherwise, may be renewed or extended one or more
consecutive times at the option of such person to a final maturity, duration or
payment date more than one year from such date of determination, whether or not
theretofore renewed or extended), (ii) the present value of the aggregate
unfunded portion of all vested benefits under all Plans, (iii) any obligation
of the Company or any Restricted Subsidiary to redeem, purchase or otherwise
acquire from any other person (other than a Wholly-owned Restricted
Subsidiary), at the option of such person, any shares of any class of stock of,
or other interest in, the Company or any Restricted Subsidiary, and (iv) the
par value or other value of Money Market Preferred Stock of the Company or any
Restricted Subsidiary as to which dividends and other payments are calculated.
For purposes of calculating Funded Debt hereunder, (a) Indebtedness
for borrowed money which is governed by an agreement that provides for the
automatic renewal of the maturity of such Indebtedness subject only to the
accuracy of representations and warranties made in such agreement (which
agreement, by its terms, does not require confirmation as to the accuracy of
representations and warranties therein relating to litigation and material
adverse changes for such automatic renewal) and the absence of default
thereunder (herein referred to as "Renewable Indebtedness") shall be considered
Indebtedness for borrowed money which has a final maturity, duration or payment
date more than one year from the date of determination of the amount of Funded
Debt to the extent such renewals thereof, as provided in such agreement, permit
such Indebtedness to mature more than one year from such date of determination,
and (b) the current maturities of Funded Debt, Indebtedness for borrowed money
represented by short-term commercial paper, and other short-term indebtedness
to the extent, in each case, that the Company or any Restricted Subsidiary has
unused availability under a committed credit facility which has a final
maturity, duration or payment date more than
5
<PAGE> 13
one year from the date of determination of the amount of Funded Debt (herein
referred to as "Refundable Indebtedness") and the Company or any Restricted
Subsidiary intends to utilize such unused availability, or other Refundable
Indebtedness, to refund or replace such Refundable Indebtedness shall be
considered Indebtedness for borrowed money which has a final maturity, duration
or payment date more than one year from the date of determination. For the
purposes of any computation of Debt Service hereunder, any Refundable
Indebtedness which the Company or any Restricted Subsidiary is able to refund,
as of the date of such determination, under the unused availability of a
committed credit facility shall be deemed to amortize and to bear interest in
the manner provided in such committed credit facility as if the principal
amount of such Refundable Indebtedness were Indebtedness for borrowed money
thereunder.
Notwithstanding the foregoing, Funded Debt shall not include (i)
Indebtedness for borrowed money of the Company owed solely to a Restricted
Subsidiary, (ii) Indebtedness for borrowed money of a Restricted Subsidiary
owed solely to the Company or another Restricted Subsidiary, and (iii)
Indebtedness for borrowed money of the Company or any Restricted Subsidiary
owed solely to any Unrestricted Subsidiary, subject in each case to the
provisions of Section 4.12, and provided that if any such Indebtedness is sold
or transferred by any such Restricted Subsidiary or Unrestricted Subsidiary to
a person other than a Subsidiary, such Indebtedness shall be Funded Debt which
shall be deemed to have been incurred at the time of such sale or transfer.
Gross Revenues for any period means the gross revenues from continuing
operations of the Company and its Restricted Subsidiaries for such period prior
to deducting operating expenses, overhead, costs of goods sold, provisions for
taxes and reserves or any other deduction, all determined and consolidated in
accordance with generally accepted accounting principles after eliminating all
intercompany items.
Guaranty of any person means and includes, as of any date as of which
the amount thereof is to be determined, without duplication (i) all obligations
of such person to purchase any materials, supplies or other property, or to
obtain the services of any other person, or for the sale or use of any
materials, supplies or other property, or the rendering of services, if the
relevant contract or other related document requires that payment for such
materials, supplies or other property to be purchased, or for such services to
be rendered, shall be made regardless of whether or not delivery of such
materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered or that payment for such materials,
supplies or other property to be sold or used, or payment for such services to
be rendered, shall be subordinated to any Indebtedness of such person owed to
the purchaser or user of such materials, supplies or other property, or the
beneficiary of such services, (ii) all obligations of such person to advance or
supply funds to, or to purchase property or services from, any other person, if
the purpose is to enable such other person to maintain working capital, net
worth or any other balance sheet condition or to pay debts, dividends or
expenses of such other person or to assure such other person or any third party
against any liability or loss, including, without limitation, obligations under
any agreement or understanding, oral or written, pursuant to which such person
is obligated to advance funds to or on behalf of any other person upon the
happening of one or more stated events, (iii) all contracts for the rental or
lease (as lessee) of any real or personal property which provide that the
payment obligations thereunder are absolute and unconditional under conditions
not customarily found in commercial leases then in general use or require that
the lessee purchase or otherwise acquire securities or obligations of the
lessor, and (iv) all guaranties, endorsements
6
<PAGE> 14
and other contingent obligations, direct or indirect, on the part of such
person (other than endorsements of negotiable instruments for collection in the
ordinary course of business) for the payment, discharge or satisfaction of
Indebtedness of others, including any agreement, contingent or otherwise, to
(x) purchase such Indebtedness of others, or (y) purchase or sell property or
services primarily to permit the debtor in respect of such Indebtedness of
others to pay the same or the owner of such Indebtedness of others to avoid
loss, or (z) supply funds to or invest in any such debtor.
For purposes of this Indenture, a Guaranty shall not include any
letter of credit, any bond obligation of, or any guarantee of performance by,
the Company or any Restricted Subsidiary undertaken or incurred in the ordinary
course of its or their business as presently conducted for or on behalf of a
Subsidiary.
Holder or Noteholder means the person in whose name a Note is
registered on the Registrar's books.
Increased Debt Capacity means an increase in the limitation on
Indebtedness which may be incurred under the provisions of Section 4.11(b) by
reference to Total Debt from seven times Annualized Cash Flow of the Company
and its Restricted Subsidiaries to eight times Annualized Cash Flow of the
Company and its Restricted Subsidiaries.
Indebtedness of the Company or any Restricted Subsidiary means and
includes, as of any date as of which the amount thereof is to be determined,
without duplication, (i) all items (other than capital items such as capital
stock, surplus and retained earnings, as well as reserves for taxes in respect
of income deferred to the future and other deferred credits and reserves) which
in accordance with generally accepted accounting principles would be included
in determining total liabilities as shown on the liability side of a balance
sheet of the Company or any Restricted Subsidiary as of such date, (ii) the
full amount of any contingent liability or obligation of the Company or any
Restricted Subsidiary, including, without limitation, the payment of money,
under or related to any preferred stock, any other security, right, or
interest, or any rights or interests attendant thereto or granted in connection
therewith, of the Company or such Restricted Subsidiary, any of which is issued
as, or in conjunction with, an anti-takeover or similar corporate protective
measure, such amount to be determined as of the time of issuance of such
preferred stock, other security, right or interest, without regard to when any
rights or interests thereunder may vest in or otherwise become exercisable by
the holders thereof, (iii) all obligations which are secured by any Lien
existing on any property or assets owned by the Company or any Restricted
Subsidiary (except capital stock of an Unrestricted Subsidiary owned by the
Company or a Restricted Subsidiary), whether or not the obligations secured
thereby shall have been assumed by the Company or any Restricted Subsidiary,
provided that in respect of secured, fully non-recourse obligations, the
maximum amount of the Indebtedness of the Company or any Restricted Subsidiary
shall be the lesser of the amount of the Indebtedness secured and the amount
carried on the books of the Company or any Restricted Subsidiary as at the time
of any such determination as the value of the property, asset or collateral
securing such Indebtedness, and (iv) all Guaranties of the Company or any
Restricted Subsidiary.
7
<PAGE> 15
For purposes of this Indenture, Indebtedness shall not include any
contingent liability or contingent obligation with respect to any letter of
credit, any bond obligation, or any guarantee of performance, undertaken or
incurred by the Company or any Restricted Subsidiary in the ordinary course of
its or their business (other than in connection with the borrowing of money or
the obtaining of credit) as presently conducted for or on behalf of a
Subsidiary.
Indebtedness of any person other than the Company or any Restricted
Subsidiary means and includes, as of any date as of which the amount thereof is
to be determined, without duplication (i) all items (other than capital items
such as capital stock, surplus and retained earnings, as well as reserves for
taxes in respect of income deferred to the future and other deferred credits
and reserves) which in accordance with generally accepted accounting principles
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such person as of such date, (ii) all obligations
which are secured by any Lien existing on property or assets owned by such
person whether or not the obligations secured thereby shall have been assumed
by such person, provided that in respect of secured, fully non-recourse
obligations, the maximum amount of the Indebtedness of such person shall be the
lesser of the amount of the Indebtedness secured and the amount carried on the
books of such person as at the time of any such determination as the value of
the property, asset or collateral securing such Indebtedness, and (iii) all
Guaranties of such person.
Indenture means this Indenture as amended or supplemented from time to
time and as to each series of Notes, unless the context indicates otherwise,
shall include the form and terms of the Notes of that series.
Interest Payment Date means, with respect to the Notes of any series,
the date specified in the Notes of such series as the fixed date on which an
installment of interest on the Notes of that series is due and payable.
Lien means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing),
any conditional sale or title retention agreement, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction.
Majority-in-Interest of Holders means, when used with respect to the
Notes generally, the Holders of Notes constituting, as of any date on which a
determination is made, at least 51% of the aggregate unpaid principal amount of
the outstanding Notes of all series as of such date; and, when used with
respect to the Notes of a particular series, the Holders of Notes of such
series constituting, as of any date on which a determination is made, at least
51% of the aggregate unpaid principal amount of the outstanding Notes of that
series as of such date.
Minority Interest means the shares of any class of the capital stock,
or any option, warrant or other right to purchase or acquire any capital stock,
other than Money Market Preferred Stock included in the definition of Funded
Debt or Short-Term Debt, of any Restricted Subsidiary
8
<PAGE> 16
owned or controlled, directly or indirectly, by any person other than the
Company or one or more Wholly-owned Restricted Subsidiaries.
Money Market Preferred Stock means preferred stock issued on terms
where the rate of dividend paid thereon is determined by (i) reference to a
recognized financial index, or (ii) through an auction mechanism conducted by a
recognized financial institution.
Multi-employer Plan means a Plan described in Section 4001(a)(3) of
ERISA to which the Company or any ERISA Affiliate is required to contribute on
behalf of any of its employees.
Net Income or, if negative, Net Loss for any period means Gross
Revenues of the Company and its Restricted Subsidiaries for such period (taken
as a cumulative whole) less operating and non-operating expenses, including
provisions for all taxes and reserves (including reserves for deferred income
taxes) of the Company, all determined in accordance with generally accepted
accounting principles on a consolidated basis, but not including in Gross
Revenues any gains (net of expenses and taxes applicable thereto) in excess of
losses resulting from the sale, conversion or other disposition of non-current
or capital assets, any gains resulting from the write-up of assets, any gains
resulting from the defeasance or acquisition of the securities of the Company
or any Restricted Subsidiary, any earnings of any person acquired by the
Company or any Restricted Subsidiary through purchase, merger or consolidation
or otherwise for any year prior to the date of acquisition, and excluding from
Gross Revenues any undistributed earnings or losses of Affiliates of the
Company other than Restricted Subsidiaries; all determined in accordance with
generally accepted accounting principles.
Notes means the Notes, as amended or supplemented from time to time,
that are issued under this Indenture.
Officer means the Chairman of the Board, the President, any Vice
President, the Treasurer or Assistant Treasurer or the Secretary of the
Company.
Officers' Certificate means a certificate signed by two Officers or by
an Officer and an Assistant Secretary of the Company and delivered to the
Trustee. See Sections 9.04 and 9.05.
Opinion of Counsel means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 9.04 and 9.05.
Optional Prepayment Date means, with respect to any Note, the date
fixed by the Company for an optional prepayment with respect to such Note in
accordance with the terms of the Notes of the applicable series and this
Indenture.
Optional Redemption Discount Rate means, with respect to the Notes of
any series, a rate equal to (i) the Treasury Yield with respect to the Notes of
such series plus (ii) 100 basis points.
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<PAGE> 17
Original Principal Amount means, with respect to any Note, the Original
Principal Amount as set forth on the face of such Note.
outstanding, when used with respect to the Notes of any series, means
as of the date of determination, all such Notes theretofore authenticated and
delivered under this Indenture, except:
(i) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Notes for whose payment, redemption, prepayment in
full or purchase the Trustee or any Paying Agent (other than the
Company) holds in trust or the Company (acting as its own Paying
Agent) has set aside and segregated in trust on the Stated Maturity
Date, a Redemption Date, Optional Prepayment Date or Purchase Date,
money sufficient to pay Notes payable on that date;
(iii) Notes with respect to which the Company has
terminated its obligations pursuant to Section 7.01 hereof; provided,
howeve, that such Notes shall continue to be outstanding for all
purposes related to those obligations that survive such termination as
provided in Section 7.01 unless and until they cease to be outstanding
in accordance with clause (i) or (ii) above or clause (iv) below; and
(iv) Notes which have been paid or purchased pursuant to
Section 2.07 or in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture, other
than any such Notes in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Notes are
held by a bona fide purchaser in whose hands such Notes are valid
obligations of the Company.
Subject to the provisions of Section 9.06, a Note does not cease to be
outstanding because the Company or one of its Affiliates holds the Note.
PBGC means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
person means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
Plan means any plan (other than a Multi-employer Plan) subject to Title
IV of ERISA maintained for employees of the Company or any ERISA Affiliate (and
any such plan no longer maintained by the Company or any of its ERISA
Affiliates to which the Company or any of its ERISA Affiliates has made or was
required to make any contributions within any of the preceding five years).
prepayment price, as to any Note or portion thereof to be prepaid on
any Optional Prepayment Date, means the amount determined in accordance with
paragraph 6 of such Note.
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<PAGE> 18
principal amount of a debt security, including any Note, as of any
date means the unpaid principal amount of such debt security as of such date;
provided, however, that for purposes of determining the unpaid principal amount
as of any date of a debt security issued at a price less than the principal
amount shown on the face thereof, such unpaid principal amount shall be equal
to the amount of the liability in respect thereof at such date determined in
accordance with generally accepted accounting principles.
Principal Installment as to any Note has the meaning set forth in
paragraph 2 of the Notes of the applicable series.
Principal Payment Date means, with respect to the Notes of any series,
the date specified in the Notes of such series as the fixed date on which a
Principal Installment on the Notes of that series is due and payable.
Prohibited Act means any one or more of the following: (i) the
incurrence of any Indebtedness which would constitute Short-Term Debt or Funded
Debt not then permitted under Section 4.11; (ii) any transaction which would
involve the making of a Restricted Payment or other payment not then permitted
under Section 4.08; (iii) any transaction pertaining to the sale, lease,
transfer or other disposition of assets not then permitted under Section 4.14;
or (iv) any designation of a Restricted Subsidiary or any designation deleting
a Restricted Subsidiary not then permitted to be made under Section 4.03.
Prohibited Transaction means any transaction described in Section 406
of ERISA which is not exempt by reason of Section 408 of ERISA or the
transitional rules set forth in Section 414(c) of ERISA and any transaction
described in Section 4975(c) of the Code which is not exempt by reason of
Section 4975(c)(2) or Section 4975(d) of the Code, or the transitional rules of
Section 2003(c) of ERISA.
purchase price, as to any Note or portion thereof to be purchased by
the Company on any Purchase Date, means the amount determined in accordance
with Section 3.08.
Redemption Date means, with respect to any Note, the date fixed by the
Company for the redemption of such Note in accordance with the terms of the
Notes of the applicable series and this Indenture.
redemption price, as to any Note to be redeemed on any Redemption
Date, means the amount determined in accordance with paragraph 7 of such Note.
Regular Record Date means, with respect to the Notes of any series, the
date specified in the Notes of such series as the record date for the
determination of Holders to whom interest is payable on the next succeeding
Interest Payment Date.
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Reportable Event means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section
4068(f) of ERISA.
Restricted Group means, collectively, the Company and the Restricted
Subsidiaries.
Restricted Subsidiary means, as of any date of determination, any
corporation organized under the laws of any state of the United States or the
District of Columbia, provided that not less than 80% of the voting control
thereof and not less than 80% of the overall economic equity therein, at the
time as of which any determination is being made, is owned, beneficially and of
record, by the Company or one or more Wholly-owned Restricted Subsidiaries, or
both, which corporation has been designated as a Restricted Subsidiary pursuant
to Section 4.03, unless and until designated as an Unrestricted Subsidiary
pursuant to Section 4.03.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations issued thereunder, as from time to time in effect.
Senior Debt means, as of any date as of which the amount thereof is to
be determined, (i) the aggregate amount of all Total Debt then outstanding,
less (ii) the aggregate amount of all Subordinated Debt then outstanding.
Short-Term Debt of any person means and includes, as of any date as of
which the amount thereof is to be determined, without duplication, all
Indebtedness of such person for borrowed money, any Guaranty by such person of
Indebtedness for borrowed money and any Capitalized Lease Obligation of such
person, whether secured or unsecured, other than Funded Debt. Notwithstanding
the foregoing, Short-Term Debt shall not include (i) Indebtedness for borrowed
money of the Company owed solely to a Restricted Subsidiary, (ii) Indebtedness
for borrowed money of a Restricted Subsidiary owed solely to the Company or
another Restricted Subsidiary, and (iii) Indebtedness for borrowed money of the
Company or any Restricted Subsidiary owed solely to any Unrestricted
Subsidiary, subject in each case to the provisions of Section 4.12, and
provided that if any such Indebtedness is sold or transferred by any such
Restricted Subsidiary or Unrestricted Subsidiary to a person other than a
Subsidiary, such Indebtedness shall be Short-Term Debt which shall be deemed to
have been incurred at the time of such sale or transfer.
Stated Maturity Date means, when used with respect to the Notes of any
series, the Stated Maturity Date as set forth on the face of the Notes of such
series.
Subordinated Debt means all unsecured Funded Debt of the Company which
is subordinated in right of payment to (x) the prior payment of the Notes, and
(y) all other Funded Debt of the Company which is not subordinated to any other
Indebtedness of the Company.
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<PAGE> 20
Subsidiary means any corporation organized under the laws of any state
of the United States or the District of Columbia, at least 50% of the total
combined voting power of all classes of voting stock of which shall, at the
time as of which any determination is being made, be owned by the Company
either directly or through Subsidiaries.
TIA means the Trust Indenture Act of 1939 (15 U.S. Code Section
Section 77aaa-77bbbb) as in effect on the date of this Indenture, except as
provided in Section 8.03.
Total Debt means, as of any date as of which the amount thereof is to
be determined, the sum of (i) the aggregate amount of Consolidated Short-Term
Debt of the Company and its Restricted Subsidiaries then outstanding, plus (ii)
the aggregate amount of Consolidated Funded Debt of the Company and its
Restricted Subsidiaries then outstanding.
Treasury Yield means, when used with respect to the Notes of any
series, the yield which shall be imputed from the yields of those actively
traded "On the Run" United States Treasury Notes having maturities as close as
practicable to the Weighted Average Life to Maturity of the Notes of such
series interpolating linearly between representative yields (as necessary).
"On the Run" United States Treasury Notes shall mean the most recently
auctioned United States Treasury Notes for such maturity, which are currently
available through Telerate page 500. The yields of such United States Treasury
Notes shall be determined as of 10:00 A.M. Eastern Time on the fifth Business
Day prior to the applicable Optional Prepayment Date or Redemption Date.
Trustee means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor and if at any time
there is more than one such party, "Trustee" as used with respect to the Notes
of any series shall mean the Trustee with respect to Notes of that series.
Trust Officer means any officer or assistant officer in the corporate
trust department of the Trustee assigned by the Trustee to administer its
corporate trust matters.
United States means the United States of America.
U. S. Government Obligations means direct obligations of, or
obligations entitled to the full faith and credit of, the United States.
Unrestricted Subsidiary means, as of any date of determination, any
Subsidiary of the Company that is not a Restricted Subsidiary.
Weighted Average Life to Maturity as applied to any Indebtedness at any
date means the number of years obtained by dividing (a) the then unpaid
principal amount of such Indebtedness into (b) the total of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or required payment, including payment at final
maturity, in respect thereof, by (ii) the number of years (calculated to the
nearest one-twelfth) which will elapse between such date and the date on which
such payment is to be made.
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<PAGE> 21
Wholly-owned Restricted Subsidiary means any Restricted Subsidiary all
of whose outstanding shares (other than directors' qualifying shares required
by law) of every class of capital stock, at the time as of which any
determination is being made, are owned, beneficially and of record, by the
Company or one or more other Wholly-owned Restricted Subsidiaries, or both.
Section 1.02 Other Definitions.
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
<S> <C>
Act 9.15(a)
D&P 3.08(a)
Event of Default 5.01
Final Consent Date 2.06
Investment 4.09
Legal Holiday 9.08
Moody's 3.08(a)
Non-Consenting Note 2.06
Paying Agent 2.03
prepayment offer 3.01(b)(iii)
Purchase Date 3.08(b)
Put Event 3.08(a)
Registrar 2.03
Restricted Payment 4.08
security register 2.03
</TABLE>
Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
Commission means the SEC.
indenture securities means the Notes.
indenture security holder means a Holder or a Noteholder.
indenture to be qualified means this Indenture.
indenture trustee or institutional trustee means the Trustee.
obligor on the indenture securities means the Company and
any other obligor thereon.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them.
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Section 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in effect on the date of this Indenture;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) "herein", "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE II.
THE NOTES
Section 2.01 Forms Generally and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of, in the case of the Series A Notes, Exhibit A, in
the case of the Series B Notes, Exhibit B, in the case of the Series C Notes,
Exhibit C, in the case of the Series D Notes, Exhibit D, and, in the case of
the Series E Notes, Exhibit E. The Notes may have such notations, legends or
endorsements as the Company may deem appropriate and as are not inconsistent
with the provisions of this Indenture, or as may be required by law, stock
exchange rule or usage. The Company shall approve the form of the Notes of
each series and any notation, legend or endorsement on them. Each Note shall
be dated the date of its authentication.
Section 2.02 Execution and Authentication; Denominations.
Two Officers shall sign the Notes for the Company by facsimile
signature. The Company's seal shall be reproduced on the Notes.
If an Officer whose signature is on a Note no longer holds that office
at the time the Trustee authenticates the Note, the Note shall be valid
nevertheless.
A Note shall not be entitled to any benefit under this Indenture or be
valid for any purpose until the Trustee manually signs the certificate of
authentication on the Note. The signature shall be conclusive evidence that
the Note has been authenticated under this Indenture.
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<PAGE> 23
Notwithstanding the foregoing, if any Note shall have been duly authenticated
and delivered hereunder but never issued and sold by the Company, and the
Company shall deliver such Note to the Trustee for cancellation as provided in
Section 2.09 together with a written statement (which need not comply with
Sections 9.04 and 9.05 and need not be accompanied by an Opinion of Counsel)
stating that such Note has not been issued and sold by the Company, for all
purposes of this Indenture such Note shall be deemed not to have been
authenticated and delivered hereunder and shall not be entitled to the benefits
of this Indenture.
The Trustee shall authenticate for original issue Series A Notes in
the aggregate Original Principal Amount of up to $5,000,000, Series B Notes in
the aggregate Original Principal Amount of up to $26,500,000, Series C Notes in
the aggregate Original Principal Amount of up to $36,000,000, Series D Notes in
the aggregate Original Principal Amount of up to $32,000,000 and Series E Notes
in the aggregate Original Principal Amount of up to $20,000,000, in each case
upon a written order of the Company, signed by two Officers. Such written
order shall specify the aggregate Original Principal Amount of the Notes of
each series to be authenticated and the date on which the original issue of the
Notes is to be authenticated. The aggregate Original Principal Amount of each
series of Notes outstanding at any time may not exceed such amounts except as
provided in Section 2.07.
The Notes shall be issuable only in registered form without coupons in
denominations of $100,000 in Original Principal Amount and any integral
multiple thereof.
Section 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register (the "security register") of the Notes of
each series and of their transfer and exchange. The Company may have one or
more co-Registrars (provided that there shall be only one security register,
which shall be maintained by the principal Registrar) and one or more
additional paying agents with respect to any series of Notes. The term "Paying
Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee of the name and address of any such Agent. If the
Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar and Paying
Agent for each series of Notes.
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<PAGE> 24
Section 2.04 Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of Holders of
the Notes of the relevant series or the Trustee all money held by the Paying
Agent for the payment of any amount in respect of the Notes of such series, and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall
segregate such money and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
account for any funds disbursed. Upon doing so, the Paying Agent shall have no
further liability for such money.
Section 2.05 Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee on or before each Interest Payment Date for the Notes of each
series and at such other times as the Trustee may request in writing a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of the Noteholders of that series.
Section 2.06 Transfer and Exchange.
When Notes are presented to the Registrar or a co-Registrar with a
request to register a transfer of them, the Registrar shall register the
transfer as requested if its requirements for such transfer are met. When
Notes are presented to the Registrar or a co-Registrar with a request to
exchange them for an equal aggregate Original Principal Amount of Notes of the
same series of other authorized denominations and otherwise containing
identical terms and provisions, the Registrar shall make the exchange as
requested if its requirements for such exchange are met. The Registrar shall
require, among other things, that any Note presented or surrendered for
transfer or exchange be duly endorsed, or be accompanied by appropriate
transfer documents duly executed, by the Holder thereof or its attorney duly
authorized in writing. To permit transfers and exchanges, the Trustee shall
authenticate Notes at the Registrar's request. Any exchange or transfer shall
be without charge, except that the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
The Registrar shall not be required to register the transfer of or
exchange (i) any Note to be prepaid at the option of the Company pursuant to
paragraph 6 of the Notes of the applicable series or any Series C Note in
respect of which a prepayment offer made by the Company in accordance with
clause (iii) of Section 3.01(b) is validly accepted by the Holder thereof
(except, in the case of any such Note (including any such Series C Note) not
prepaid in full, a transfer or exchange thereof after notation has been made
thereon by the Trustee following the relevant Optional Prepayment Date of the
amount of such prepayment and the change in the amount of each Principal
Installment thereafter due and payable with respect to such Note as
contemplated by Section 3.07) or (ii) any Note in respect of which a notice
requiring the purchase thereof by the Company at the option of the Holder
pursuant to paragraph 8 of the Notes has been given by
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<PAGE> 25
the Holder thereof in accordance with Section 3.08 (except, in the case of any
Note to be so purchased in part, the portion thereof not to be so purchased).
Further, if the Company shall solicit the consent of the Holders to a
Prohibited Act or Increased Debt Capacity as contemplated by Section 3.02, the
Registrar shall not be required to register the transfer of or exchange any
Notes during the period commencing at the opening of business on the day
following the date of the Company's written request for such consent (or, if a
record date has been fixed by the Company for the determination of Holders
entitled to give such consent, the opening of business on the day following
such record date) and ending at the close of business on the second full
Business Day following the last day on which consent may be given by the
Holders in response to such solicitation (which day (the "Final Consent Date")
shall not be more than 30 days after the date of the Company's written request
for such consent). If the Company has not received the consent of a
Majority-in-Interest of Holders to the Prohibited Act or Increased Debt
Capacity for which such consent has been solicited by the Final Consent Date,
then the Registrar shall also not be required to register the transfer of or
exchange any Note with respect to which the requested consent was not validly
given on or prior to the Final Consent Date (each a "Non-Consenting Note")
unless the Company has advised the Registrar that it will not exercise its
option to redeem the Non-Consenting Notes pursuant to Section 3.02(a) or
Section 3.02(b), as applicable, or the Company fails to give notice of such
optional redemption to the Holders of Non-Consenting Notes within the time
period specified in Section 3.04 or to deposit the redemption price therefor
with the Paying Agent as and when required by Section 3.06.
Section 2.07 Replacement Notes.
If a mutilated Note is surrendered to the Registrar or if the Holder
of a Note claims that the Note has been lost, destroyed or wrongfully taken,
then, in the absence of notice to the Company or the Trustee that such Note has
been acquired by a bona fide purchaser, the Company shall issue and the Trustee
shall authenticate a replacement Note of the same series if the Trustee's
requirements for such replacement are met. If required, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Company and the
Trustee to protect the Company, the Trustee or any Agent from any loss which
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note. Every replacement Note is an additional
obligation of the Company.
In case any such mutilated, lost, destroyed or wrongfully-taken Note
has become or is about to become due and payable, or is about to be purchased
by the Company at the option of the Holder pursuant to paragraph 8 of such Note
and Section 3.08, the Company in its discretion may, instead of issuing a new
Note, pay or purchase such Note.
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<PAGE> 26
Section 2.08 Temporary Notes.
Pending the preparation of definitive Notes of any series, the Company
may execute and the Trustee, upon the written order of the Company pursuant to
Section 2.02, shall authenticate temporary Notes. Temporary Notes of any
series shall be in authorized denominations and shall be substantially in the
form of definitive Notes of such series, but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall cause definitive Notes of that series to be prepared and,
upon surrender for cancellation of any one or more temporary Notes of such
series, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like aggregate Original Principal Amount of
definitive Notes of authorized denominations of the same series and containing
identical terms and provisions. Until so exchanged the temporary Notes of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Notes of such series.
Section 2.09 Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation, including, as provided in Section 2.02, authenticated Notes which
the Company has not issued and sold. The Company and each Agent shall forward
to the Trustee for cancellation any Notes surrendered to them for transfer,
exchange, payment, redemption, prepayment or for purchase at the option of the
Holder thereof. The Trustee and no one else shall cancel all Notes surrendered
for transfer, exchange, payment, redemption, prepayment, purchase or
cancellation, and may dispose of cancelled Notes as the Company directs,
provided, however, that the Trustee shall not be required to destroy cancelled
Notes. The Company may not issue new Notes to replace Notes that it has paid
or that have been delivered to the Trustee for cancellation.
Section 2.10 Payment of Interest; Defaulted Interest.
Interest (except defaulted interest) on a Note of any series which is
payable on any Interest Payment Date shall be paid to the Holder in whose name
that Note (or one or more predecessor Notes) is registered on the security
register at the close of business on the Regular Record Date for such interest
payment; provided, however, that interest payable on any Maturity Date (other
than certain Purchase Dates as provided in Section 3.08) shall be payable to
the person to whom principal is payable. At the option of the Company, payment
of interest on any Note may be made by check mailed to the address of the
person entitled thereto as such address appears in the security register,
subject, however, to the provisions of paragraph 3 of the Notes with respect to
the rights of each Holder satisfying the requirements thereof to receive
payment by wire transfer to an account designated by such Holder.
If the Company defaults in a payment of interest on the Notes of any
series on any Interest Payment Date, it shall pay the defaulted interest to the
persons who are Holders of Notes of such series at the close of business on a
subsequent special record date. The Company shall fix the special record date
and payment date. At least 15 days before the special record date, the Company
shall mail to each Holder of Notes of such series a notice that states the
special record
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<PAGE> 27
date, the payment date and the amount of defaulted interest to be paid. The
Company shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Note of such series and the date of the proposed
payment, and at the same time the Company shall deposit with the Paying Agent
an amount of money equal to the aggregate amount proposed to be paid in respect
of such defaulted interest or shall make arrangements satisfactory to the
Paying Agent for such deposit prior to the date of the proposed payment. The
Company may pay defaulted interest in any other lawful manner. Any payment of
defaulted interest shall include the additional interest, if any, that has
accrued on such defaulted interest in accordance with paragraph 1 of the Notes
of such series and Section 4.02.
Section 2.11 Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any Agent may treat the person in whose name such Note
is registered as the owner of such Note for the purpose of receiving payment of
principal, premium, if any, and (subject to Section 2.10) interest on such Note
and for all other purposes whatsoever, and neither the Company, the Trustee nor
any Agent shall be affected by notice to the contrary.
ARTICLE III.
PREPAYMENT, REDEMPTION AND PURCHASE
Section 3.01 Optional Prepayment.
(a) Series A Notes. The Company, at its option, may prepay the
Series A Notes in accordance with paragraph 6 of the Series A Notes, in whole
at any time or, subject to Section 3.01(d), in part from time to time.
(b) Series B Notes and Series C Notes. The Company, at its
option, may prepay the Series B Notes in accordance with paragraph 6 of the
Series B Notes and the Series C Notes in accordance with paragraph 6 of the
Series C Notes, in whole at any time or, subject to Section 3.01(d), in part
from time to time, subject, however, to the following:
(i) No optional prepayment the Optional Prepayment Date
for which is prior to February 1, 2000 may be made with respect to the
Series B Notes unless simultaneously therewith the Company is making
an optional prepayment with respect to the same percentage of the
aggregate unpaid principal amount of the outstanding Series C Notes
(subject to rounding differences).
(ii) Subject to clause (iii) below, no optional prepayment
the Optional Prepayment Date for which is prior to February 1, 2001
may be made with respect to the Series C Notes unless simultaneously
therewith the Company is making an optional
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<PAGE> 28
prepayment with respect to the same percentage of the aggregate
unpaid principal amount of the outstanding Series B Notes (subject to
rounding differences).
(iii) If the Company determines to make an optional
prepayment with respect to the Series B Notes on an Optional
Prepayment Date that is on or after February 1, 2000 and on or prior
to January 31, 2001, then, in accordance with Section 3.03(c), the
Company shall give written notice thereof to each Holder of Series C
Notes at the same time that the notice of such optional prepayment is
given to the Holders of Series B Notes pursuant to Section 3.03(b) and
shall offer to prepay in the aggregate the same percentage of the
aggregate unpaid principal amount of the outstanding Series C Notes on
such Optional Prepayment Date as it has elected to prepay of the
outstanding Series B Notes on such date, at a prepayment price equal
to the unpaid principal amount of the Series C Notes or portions
thereof to be prepaid, plus accrued and unpaid interest on the unpaid
principal amount so prepaid to the Optional Prepayment Date (a
"prepayment offer"). Any Holder intending to accept such prepayment
offer shall deliver written notice of such acceptance, which shall be
irrevocable unless waived by the Company, to the Paying Agent by the
close of business on the sixteenth day preceding the Optional
Prepayment Date, which notice shall specify the name of such Holder
and shall identify the Series C Notes as to which the prepayment offer
is accepted and the Original Principal Amount and unpaid principal
amount thereof. No such notice shall be deemed to be delivered until
such notice is actually received by the Paying Agent. The right of
the Holders of Series C Notes to accept the prepayment offer shall
terminate as of the close of business on the sixteenth day preceding
the Optional Prepayment Date. With respect to each Series C Note as
to which notice has been validly given to the Paying Agent of the
Holder's acceptance of the prepayment offer, the portion of the unpaid
principal amount thereof to be prepaid shall be determined on the same
basis as if all Holders of Series C Notes had accepted the prepayment
offer and the aggregate amount that the Company offered to prepay was
applied to the prepayment of the outstanding Series C Notes pro rata
in accordance with the respective unpaid principal amounts thereof as
required by Section 3.01(d). The Company shall comply with applicable
federal and state securities laws in performing its obligations under
this clause (iii).
(c) Series D Notes and Series E Notes. The Company, at its
option, may prepay the Series D Notes in accordance with paragraph 6 of the
Series D Notes and the Series E Notes in accordance with paragraph 6 of the
Series E Notes, in whole at any time or, subject to Section 3.01(d), in part
from time to time; provided, however, that no optional prepayment may be made
with respect to either of such two series of Notes unless simultaneously
therewith the Company is making an optional prepayment with respect to the same
percentage of the aggregate unpaid principal amount of the outstanding Notes of
the other of such two series of Notes (subject to rounding differences).
(d) Partial Prepayments. In the event of any partial prepayment
of the Notes of a series pursuant to paragraph 6 of the Notes of such series,
the aggregate principal amount of such prepayment shall be applied to the
partial prepayment of the outstanding Notes of such series pro
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rata in accordance with the respective unpaid principal amounts thereof and
shall be applied ratably to the unpaid principal amount per $100,000 in
Original Principal Amount of a Note, with the amount of such prepayment per
$100,000 in Original Principal Amount of a Note of such series being rounded,
if applicable, to the nearest $1.00. Subject to such rounding, the aggregate
principal amount of any partial prepayment of the Notes of any series shall be
in a minimum amount of $1,000,000 or an integral multiple of $500,000 in excess
thereof; provided, however, that when the Company, in accordance with Section
3.01(b) or 3.01(c), is required to make an optional prepayment with respect to
two series of the Notes if it exercises its option to make a prepayment with
respect to one of such series, then the foregoing minimum amount requirement
shall only apply to the aggregate principal amount of the partial prepayment
with respect to the Notes of one of such two series, and the aggregate
principal amount of the partial prepayment with respect to the other of such
two series shall be the amount determined in accordance with Section 3.01(b) or
3.01(c), as applicable.
Section 3.02 Optional Redemption of Non-Consenting Notes.
(a) If the Company has requested in writing the consent of the
Holders of the outstanding Notes to a Prohibited Act and the Company has not
received the consent of a Majority-in-Interest of Holders of the Notes within
30 days thereafter, the Company, at its option, may redeem in accordance with
paragraph 7(a) of the Notes of each applicable series all (but not less than
all) of the Non-Consenting Notes on a Redemption Date selected by the Company
that is not less than 30 days nor more than 60 days after the date of the
Company's written request; provided, however, that (i) such Prohibited Act is
undertaken in good faith for a bona fide business reason and not primarily to
avoid the requirements applicable to a prepayment pursuant to Section 3.01, and
(ii) at the time any notice of redemption under this Section 3.02(a) is given,
(x) the Company shall have sufficient funds available to it to pay the
aggregate redemption price payable on the Redemption Date, and (y) immediately
before and after giving effect to the redemption of the Non-Consenting Notes
and after giving effect to such Prohibited Act, the Company would be permitted
to incur at least $1.00 of additional Funded Debt pursuant to Section 4.11(b)
and no Event of Default or Default exists or would then be continuing.
(b) If at any time on or after December 1, 1999, the Company has
requested in writing the consent of the Holders of the outstanding Notes to
Increased Debt Capacity and the Company has not received the consent of a
Majority-in-Interest of Holders of the Notes within 30 days thereafter, the
Company, at its option, may redeem in accordance with paragraph 7(b) of the
Notes of each applicable series all (but not less than all) of the
Non-Consenting Notes on a Redemption Date selected by the Company that is not
less than 30 days nor more than 60 days after the date of the Company's written
request; provided, however, that at the time any notice of redemption under
this Section 3.02(b) is given, (i) the Company shall have sufficient funds
available to it to pay the aggregate redemption price payable on the Redemption
Date, and (ii) immediately before and after giving effect to the redemption of
the Non-Consenting Notes and after giving effect to such Increased Debt
Capacity, the Company would be permitted to incur at least $1.00 of additional
Funded Debt pursuant to Section 4.11(b) and no Event of Default or Default
exists or would then be continuing.
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Section 3.03 Notices to Trustee and Holders With Respect to Optional
Prepayments.
(a) If the Company elects to prepay the Notes of any series
pursuant to paragraph 6 of the Notes of such series, it shall so notify the
Trustee and set forth in such notice the Optional Prepayment Date, the
aggregate unpaid principal amount of the Notes of such series to be prepaid
and, with respect to the prepayment price, the unpaid principal amount to be
prepaid per $100,000 in Original Principal Amount of the Notes of such series
and whether a premium may be payable pursuant to paragraph 6 of the Notes of
such series. If such optional prepayment is to be made during any period that
the Company is required pursuant to Section 3.01(b) or Section 3.01(c) to make
a pro rata prepayment with respect to two series of the Notes if it elects to
make an optional prepayment with respect to either of such series, then such
notice to the Trustee shall set forth the information required by the preceding
sentence as to each such series of Notes and state that such prepayment is
being made pursuant to Section 3.01(b) or Section 3.01(c), as applicable.
Further, if such optional prepayment is to be made with respect to the Series B
Notes during the period that the Company is required to make a simultaneous
prepayment offer to the Holders of Series C Notes pursuant to clause (iii) of
Section 3.01(b), such notice to the Trustee shall set forth the terms of such
prepayment offer in accordance with clause (iii) of Section 3.01(b).
The Company shall give each notice provided for in this Section
3.03(a) to the Trustee at least 60 days before the Optional Prepayment Date
(unless a shorter notice shall be satisfactory to the Trustee).
(b) Notice of the Company's election to make an optional
prepayment with respect to the Notes of any series shall be sent to the Holders
of Notes of such series in the manner provided in Section 9.02 not less than 30
days nor more than 60 days before the Optional Prepayment Date.
The notice shall identify the series of Notes to be prepaid (and, in
the case of a partial prepayment, the aggregate unpaid principal amount of the
Notes of such series to be prepaid) and shall state:
(1) the Optional Prepayment Date;
(2) with respect to the prepayment price, the unpaid
principal amount to be prepaid per $100,000 in Original Principal
Amount of Notes of such series, that the prepayment price will include
the accrued and unpaid interest on the unpaid principal amount to be
prepaid to the Optional Prepayment Date and whether such prepayment
price may include a premium;
(3) if a premium may be payable, that the amount of such
premium will be determined as of a specified date prior to the
Optional Prepayment Date and the method of calculating the same in
accordance with this Indenture;
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(4) the name and address of the Paying Agent; and
(5) that Notes of such series must be surrendered to the
Paying Agent to collect the prepayment price and that on and after the
Optional Prepayment Date interest shall cease to accrue on the
principal amount to be prepaid.
At the Company's request, the Trustee shall give the notice of
prepayment in the Company's name and at the Company's expense, provided that
the Company shall have furnished to the Trustee the Officers' Certificate and
Opinion of Counsel required pursuant to Section 9.04 at least five days prior
to the date that the Trustee is required to take any action in connection with
a prepayment.
Not less than two Business Days prior to the Optional Prepayment Date,
the Company shall deliver to the Trustee an Officers' Certificate setting forth
the amount, if any, of the premium to be included in the prepayment price per
$100,000 in Original Principal Amount of the Notes of the applicable series
and, in reasonable detail, the calculation thereof. Such calculation shall,
absent manifest error, be conclusive and binding on the Holders of such Notes.
At the request of a Holder, the Trustee shall advise such Holder of the amount
of the premium and the calculation thereof or furnish such Holder with a copy
of the Officers' Certificate setting forth such calculation.
(c) If a prepayment offer is required to be made to the Holders of
Series C Notes pursuant to clause (iii) of Section 3.01(b), notice of such
prepayment offer shall be sent to the Holders of Series C Notes in the manner
provided in Section 9.02 at the same time as the notice of the relevant
optional prepayment with respect to the Series B Notes is sent to the Holders
of Series B Notes pursuant to Section 3.03(b).
The notice shall state that a prepayment offer is being made to the
Holders of Series C Notes as required by the Indenture (and, in the case of a
partial prepayment, the aggregate unpaid principal amount of the Series C Notes
to be prepaid if the prepayment offer is accepted by all Series C Noteholders)
and shall:
(1) state the Optional Prepayment Date;
(2) with respect to the prepayment price, state the
unpaid principal amount to be prepaid per $100,000 in Original Principal Amount
of Series C Notes with respect to which the prepayment offer is accepted, that
the prepayment price will include the accrued and unpaid interest on the unpaid
principal amount to be prepaid to the Optional Prepayment Date and that no
premium will be payable;
(3) state the name and address of the Paying Agent;
(4) provide a brief description of the procedures to be
followed by Holders of Series C Notes to accept the prepayment offer, including
a statement as to the date by which
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notices of acceptance of the prepayment offer must be received by the Paying
Agent and that such notices of acceptance will be irrevocable; and
(5) state that Series C Notes with respect to which the
prepayment offer has been accepted must be surrendered to the Paying Agent to
collect the prepayment price and that on and after the Optional Prepayment Date
interest shall cease to accrue on the principal amount of such Series C Note to
be prepaid.
Section 3.04 Notices to Trustee and Holders With Respect to Redemption.
(a) If the Company requests in writing the consent of the Holders
of the outstanding Notes to a Prohibited Act or, at any time on or after
December 1, 1999, to Increased Debt Capacity, the Company shall notify the
Trustee of such request on or before the date such written request is sent to
the Holders and may include in such written request the notice required by
Section 3.04(c) of its election to redeem the Non-Consenting Notes if the
consent of a Majority-in-Interest of Holders of the Notes has not been received
within 30 days after the date of such request, which election may be made
subject to such other conditions not inconsistent with this Indenture or the
terms of the Notes as the Company may deem appropriate. If the notice of
redemption is so included in the Company's written request, then the notice to
the Trustee and the Officers' Certificate required by Section 3.04(b) shall be
given to the Trustee on or before the date such written request is sent to the
Holders.
(b) If the Company elects to redeem the Non-Consenting Notes
pursuant to paragraph 7 of the Notes, it shall notify the Trustee of the
Redemption Date, whether such redemption is being made pursuant to Section
3.02(a) or Section 3.02(b), and, with respect to the redemption price for the
Non-Consenting Notes of each series, the unpaid principal amount per $100,000
in Original Principal Amount of the Notes of such series, the amount of the
accrued and unpaid interest on such unpaid principal amount to the Redemption
Date, and whether a premium may be payable pursuant to paragraph 7(a) or
paragraph 7(b), as applicable, of the Notes of such series. If known at the
time such notice is given, the notice shall also state the aggregate unpaid
principal amount of the Non-Consenting Notes of each series. Together with
such notice, the Company shall furnish to the Trustee an Officers' Certificate
evidencing compliance with the restrictions on such redemption set forth in
Section 3.02(a) or Section 3.02(b), as applicable.
Except as otherwise provided in Section 3.04(a), the Company shall
give each notice provided for above in this Section 3.04(b) to the Trustee at
least 15 days before the Redemption Date. If such notice is given to the
Trustee on or before the date of the Company's written request for consent as
contemplated by Section 3.04(a), then promptly following the determination
thereof, the Company shall notify the Trustee of whether the conditions to the
Company's election to redeem the Non-Consenting Notes have been satisfied or,
if permissible, waived and, if so, the aggregate unpaid principal amount of the
Non-Consenting Notes of each series and the identification thereof.
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(c) Notice of the Company's election to redeem Non-Consenting
Notes shall be sent to the Holders of such Notes in the manner provided in
Section 9.02 not less than 15 days before the Redemption Date, except as
otherwise provided in Section 3.04(a).
The notice shall identify the provision of the Notes and this
Indenture pursuant to which redemption is being made (and, if known at the time
of such notice, the aggregate unpaid principal amount of the Non-Consenting
Notes of each applicable series) and shall:
(1) state the Redemption Date;
(2) with respect to the redemption price for the
Non-Consenting Notes of each series, state the unpaid principal amount
per $100,000 in Original Principal Amount of the Notes of such series,
that the redemption price will include the accrued and unpaid interest
on such unpaid principal amount to the Redemption Date and whether
such redemption price may include a premium;
(3) if a premium may be payable, state that the amount of
such premium will be determined as of a specified date prior to the
Redemption Date and the method of calculating the same in accordance
with this Indenture;
(4) if such notice is included in the Company's written
request for consent as contemplated by Section 3.04(a), provide a
brief description of the conditions to the Company's election to
redeem Non-Consenting Notes and of the procedures for notifying Non-
Consenting Holders of the satisfaction or, if permissible, waiver
thereof;
(5) state the name and address of the Paying Agent; and
(6) state that Non-Consenting Notes must be surrendered
to the Paying Agent to collect the redemption price and that on and
after the Redemption Date interest shall cease to accrue on the
Non-Consenting Notes.
At the Company's request, the Trustee shall give the notice of
redemption (if not included in the Company's written request for consent) in
the Company's name and at the Company's expense, provided that the Company
shall have furnished to the Trustee the Officers' Certificate and Opinion of
Counsel required pursuant to Section 9.04 at least five days prior to the date
that the Trustee is required to take any action in connection with a
redemption.
Not less than two Business Days prior to the Redemption Date, the
Company shall deliver to the Trustee an Officers' Certificate setting forth the
amount, if any, of the premium to be included in the redemption price per
$100,000 in Original Principal Amount of the Non- Consenting Notes of each
series and, in reasonable detail, the calculation thereof. Such calculation
shall, absent manifest error, be conclusive and binding on the Holders of such
Notes. At the request of a Holder, the Trustee shall advise such Holder of the
amount of the premium
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and the calculation thereof or furnish such Holder with a copy of the Officers'
Certificate setting forth such calculation.
Section 3.05 Effect of Notice of Prepayment or Redemption.
Once notice of prepayment is mailed, Notes (or the applicable portion
thereof) of the series to be prepaid shall become due and payable on the
Optional Prepayment Date and at the applicable prepayment price. Upon
surrender to the Paying Agent, Notes (or the applicable portion thereof) of the
series to be prepaid shall be paid at the applicable prepayment price for such
Notes.
Once notice of redemption is mailed (or, if such redemption is subject
to the satisfaction or, if permissible, waiver of conditions stated in such
notice, then upon the satisfaction or waiver of such conditions),
Non-Consenting Notes shall become due and payable on the Redemption Date and at
the applicable redemption price. Upon surrender to the Paying Agent,
Non-Consenting Notes shall be paid at the applicable redemption price for such
Notes.
Section 3.06 Deposit of Prepayment Price or Redemption Price.
On or before noon, New York time, on the relevant Optional Prepayment
Date or Redemption Date, the Company shall deposit with the Paying Agent money,
in immediately available funds, sufficient to pay the applicable prepayment
price or redemption price, as the case may be, of all Notes (or portions
thereof) to be prepaid or redeemed on that date. If such deposit is so made,
then on and after such Optional Prepayment Date or Redemption Date, interest
shall cease to accrue on the Notes (or portions thereof) to be prepaid or
redeemed on such date.
Section 3.07 Notes Prepaid in Part.
Upon surrender of a Note that is prepaid in part, the Trustee shall
place an appropriate notation thereon of the portion of the unpaid principal
amount per $100,000 in Original Principal Amount of such Note that was prepaid
and of the change in the amount of each Principal Installment thereafter due
and payable per $100,000 in Original Principal Amount of such Note, and shall
return such Note to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company shall execute and the Trustee shall authenticate and
deliver a new Note of the same series and in the same Original Principal Amount
in exchange for the Note so prepaid in part that reflects such prepayment and
changed terms.
Section 3.08 Change of Control.
(a) With respect to the Notes of each series, in the event that
(i) a Change of Control shall occur at any time after the date on which the
Notes of such series are first issued under this Indenture and on or prior to
the Stated Maturity Date of the Notes of such series and (ii) on any date which
occurs during the period commencing 90 days before and ending 90 days after the
date that a public filing has been made with the SEC or other general public
disclosure has been
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made indicating the occurrence of such Change of Control, the then current
rating of the Notes of such series by Duff & Phelps Credit Rating Co. or its
successor ("D&P") or by Moody's Investors Service, Inc. or its successor
("Moody's") is downgraded to lower than BBB-, in the case of D&P (or an
equivalent successor rating), or lower than Baa3, in the case of Moody's (or an
equivalent successor rating) and, in the event that such downgrading shall have
occurred during the 90-day period prior to such public disclosure, the rating
assigned to the Notes of such series by D&P or Moody's as of the close of
business on the date of such public disclosure remains lower than BBB- or lower
than Baa3, respectively (the occurrence of the conditions specified in both (i)
and (ii) being a "Put Event"), then each Holder of Notes of such series shall
have the right, at such Holder's option and subject to the conditions of this
Section 3.08, to require the Company to purchase all or any portion (such
portion to be $100,000 in Original Principal Amount or an integral multiple
thereof) of such Holder's Notes of such series at a purchase price equal to
100% of the unpaid principal amount of such Note (or such portion), plus
accrued and unpaid interest on the unpaid principal amount of such Note (or
such portion) to the Purchase Date (as hereinafter defined). The exercise by a
Holder of its right to require the Company to purchase all or a portion of such
Holder's Notes pursuant to this Section 3.08 shall be irrevocable unless waived
by the Company. Notwithstanding anything to the contrary in this Section 3.08,
with respect to the Notes of any series, the Company shall not be obligated to
purchase Notes of such series or give notice to the Holders thereof with
respect to more than one Put Event.
(b) In case a Put Event shall have occurred, the Company shall, in
the manner provided in Section 9.02, give written notice of such Put Event to
the Trustee and to each Holder of outstanding Notes of such series within
fifteen days following such occurrence, which notice shall set forth details
regarding the right of the Holders to require the Company to purchase Notes of
such series, the date (the "Purchase Date") fixed for purchase by the Company
of such Notes, which date shall (subject to Section 9.08) be the 90th day
following the date on which such notice is mailed by the Company, and the name
and address of the Paying Agent (which, for purposes of this Section 3.08,
shall be the Trustee) to which such Notes are to be presented and surrendered
and, if applicable, shall state that interest accrued to the Purchase Date will
be paid as specified in said notice and that on and after said Purchase Date
interest on Notes (or portions thereof) presented and surrendered for purchase
shall cease to accrue. Any Holder intending to exercise its right to put its
Notes to the Company shall deliver written notice of such intention to the
Paying Agent, and shall concurrently present and surrender the Notes to be
purchased to the Paying Agent in proper form for purchase by the Company, by
the close of business on the fifteenth day preceding the Purchase Date. Any
Note so surrendered for purchase in part shall (if the Company, the Registrar
or the Trustee so requires) be duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Registrar
and/or the Trustee duly executed by, the Holder thereof or its attorney duly
authorized in writing. Such notice by a Holder shall specify the name of such
Holder, identify the Notes so surrendered, their aggregate Original Principal
Amount and, if less than the entire Original Principal Amount thereof is to be
purchased, the portion of such Original Principal Amount to be purchased (in
increments of $100,000 in Original Principal Amount) and the denomination or
denominations (which shall be $100,000 in Original Principal Amount or an
integral multiple thereof) of the
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Note or Notes of the same series to be issued to the Holder for the portion of
the Original Principal Amount of the surrendered Note not to be purchased. No
such notice shall be deemed to have been delivered, and no such Notes shall be
deemed to have been presented and surrendered, until such notice and Notes are
actually received by the Paying Agent. The right of the Holders to require the
Company to purchase Notes pursuant to this Section 3.08 shall terminate as of
the close of business on the fifteenth day preceding the Purchase Date and the
Company shall not be obligated to purchase any Notes presented and surrendered
thereafter.
(c) With respect to each Note which has been properly presented
and surrendered and as to which notice has been given to the Paying Agent of
the Holder's intention to put the same (or any portion thereof) to the Company
in accordance with this Section 3.08, such Note (or portion thereof) shall
become due and payable on the Purchase Date and, on and after the Purchase Date
(unless, as to any such Note (or portion thereof), the Company fails to deposit
the purchase price thereof and pay the accrued interest thereon as provided
below), interest on such Note (or portion thereof) shall cease to accrue. On
or before noon, New York time, on the Purchase Date, the Company shall deposit
with the Paying Agent money, in immediately available funds, sufficient to pay
the purchase price of and (except if the Purchase Date is an interest payment
date) accrued interest on all Notes (or portions thereof) to be purchased on
the Purchase Date. The Paying Agent shall promptly mail (or deliver by wire
transfer under the circumstances described in paragraph 3 of the Notes of each
series) to the Holders of Notes payment in an amount equal to such purchase
price and accrued interest; provided, however, that (i) installments of
interest for which the Interest Payment Date or other date fixed for payment
thereof is on or prior to the Purchase Date shall be payable to the Holders of
such Notes, or one or more predecessor Notes, registered as such at the close
of business on the relevant Regular Record Date or special record date, as the
case may be, according to their terms and the provisions of Section 2.10 and
(ii) if the Purchase Date is after a record date for the payment of interest on
Notes of such series and before the related interest payment date, any accrued
and unpaid interest to the Purchase Date will be payable on the Purchase Date
to the person who was the registered Holder of such Note at the close of
business on such record date.
If any Note is duly surrendered in accordance with this Section 3.08
for purchase in part only, the Company shall execute and the Trustee shall
promptly authenticate and deliver to the Holder of such Note, without service
charge, a new Note or Notes of the same series, containing identical terms and
provisions, of any authorized denomination as requested by such Holder in its
notice given pursuant to Section 3.08(b) in aggregate Original Principal Amount
equal to and in exchange for the unpurchased portion of the Original Principal
Amount of the Note so surrendered.
The Company shall comply with applicable federal and state securities
laws in performing its obligations under this Section 3.08.
(d) The Company shall take all reasonable action necessary to
enable D&P and Moody's to provide ratings for the Notes of each series.
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(e) Notwithstanding anything to the contrary in this Indenture, if
the giving of the notice of a Put Event shall have been completed as provided
in this Section 3.08, or if provision satisfactory to the Trustee for the
giving of such notice shall have been made, and if the Company shall have
deposited with the Paying Agent funds sufficient to purchase the Notes (or
portions thereof) to be purchased on the Purchase Date, at the applicable
purchase price and to pay as provided above the accrued and unpaid interest
thereon, then all obligations of the Company in respect of such Notes (or
portions thereof) shall cease and be discharged and the Holders of such Notes
shall thereafter be restricted exclusively to such funds for any and all claims
of whatsoever nature on their part under this Indenture or in respect of such
Notes (or portions thereof).
ARTICLE IV.
COVENANTS
Section 4.01 Payment of Notes.
The Company shall make all payments in respect of the Notes of each
series on the dates and in the manner provided in the Notes of such series or
pursuant to this Indenture. The Original Principal Amount, each Principal
Installment, prepayment price, redemption price, purchase price and interest,
as applicable, shall be considered paid on the applicable date due if on such
date the Paying Agent or the Trustee holds, in accordance with this Indenture,
money sufficient to pay all amounts then due.
Section 4.02 Interest on Overdue Amounts.
To the extent permitted by law, the Company shall pay interest on
overdue principal, premium, if any, and interest payable with respect to the
Notes of each series at a rate per annum equal to the greater of (x) the rate
of interest announced publicly from time to time by The Bank of New York in New
York, New York as its "prime rate" or (y) 2% in excess of the rate per annum
otherwise applicable to the Notes of such series as set forth on the face of
such Notes, which interest shall accrue from and including the date such
overdue amount was originally due to but excluding the date payment of such
overdue amount has been made or duly provided for in full (after as well as
before judgment).
Section 4.03 Designation of Restricted Subsidiaries.
(a) The Company at any time may designate an Unrestricted
Subsidiary as a Restricted Subsidiary or designate a Restricted Subsidiary as
an Unrestricted Subsidiary, provided that (i) no Event of Default or Default
shall exist immediately before or after such designation, (ii) on a pro forma
basis at the time of such designation, the Company would then be permitted to
incur at least $1.00 of additional Funded Debt pursuant to Section 4.11(b), and
(iii) such designation
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shall not render the Company and its Restricted Subsidiaries insolvent or
generally unable to pay its or their respective debts as they become due and,
provided, further, that the Company delivers to the Trustee an Officers'
Certificate with respect to such designation within 75 days after the end of
the fiscal quarter of the Company in which such designation is made (or, in the
case of a designation made during the last fiscal quarter of any fiscal year of
the Company, within 120 days after the end of such fiscal year) which Officers'
Certificate shall state the effective date of such designation. The Company
shall make the initial designation of Restricted Subsidiaries with respect to
the Notes, and deliver the required Officers' Certificate to the Trustee, on or
prior to the date of initial issuance of Notes of each series.
(b) The Company may from time to time designate as "Restricted
Assets" in the manner set forth in Section 4.03(a), a discrete CATV System or
Systems, or other discrete cable broadcast properties with measurable Cash Flow
attributable thereto and in respect of which separately identifiable books and
records are maintained, provided that (i) such Restricted Assets shall at all
times be directly owned by a Restricted Subsidiary, and shall, for all purposes
hereof be deemed assets of such Restricted Subsidiary, and (ii) at the time of
such designation the Company shall comply with the provisions of Section
4.03(a). The Company may designate any "Restricted Asset" as an "Unrestricted
Asset," provided that (i) after such designation, such asset shall not be owned
by a Restricted Subsidiary, and (ii) at the time of such designation the
Company shall comply with the provisions of Section 4.03(a).
Section 4.04 SEC Reports.
The Company shall deliver to the Trustee within 15 days after it files
them with the SEC copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act. The Company shall also comply with the other provisions of TIA Section
314(a).
Section 4.05 Corporate Existence.
Except as otherwise specifically permitted by Sections 4.13 and 4.14,
the Company will preserve and keep in force and effect, and will cause each
Restricted Subsidiary to preserve and keep in force and effect, its and their
respective corporate existences and all franchises, rights, licenses and
permits necessary to the proper conduct of its and their respective businesses,
except where any discontinuance or termination of any of the foregoing will not
have a material and adverse effect on the Company and its Restricted
Subsidiaries, taken as a whole, and will not violate or result in a violation
of this Indenture, provided that the Company may not terminate its corporate
existence except as permitted by Section 4.13(a).
Section 4.06 Compliance Certificate.
The Company shall, within 120 days after the end of each fiscal year
of the Company, commencing with the fiscal year ending December 31, 1994,
deliver to the Trustee a certificate
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of an appropriate Officer (which, for purposes of this Section 4.06 only, shall
be the principal executive officer, the principal financial officer or the
principal accounting officer of the Company) covering the period from the date
of issuance of such Notes to the end of the fiscal year in which such Notes
were issued, in the case of the first such certificate, and covering the
preceding fiscal year, in the case of each subsequent certificate, and stating
whether or not, to the knowledge of the signer, the Company has complied with
all conditions and covenants on its part contained in this Indenture, and, if
the signer has obtained knowledge of any default by the Company in the
performance, observance or fulfillment of any such condition or covenant,
specifying each such default and the nature thereof. For the purpose of this
Section 4.06, compliance shall be determined without regard to any grace period
or requirement of notice provided pursuant to the terms of this Indenture. The
certificate need not comply with Section 9.05.
The Company shall deliver to the Trustee within 120 days after the end
of each fiscal year of the Company a written statement signed by the Company's
independent auditors stating (1) that their audit examination has included a
review of the terms of this Indenture and the Notes as they relate to
accounting matters, and (2) whether, in connection with their audit
examination, any Event of Default has come to their attention and if such an
Event of Default has come to their attention, specifying the nature and period
of existence thereof.
Section 4.07 Debt Service Test.
The Company will not permit the Annualized Cash Flow of the Company
and its Restricted Subsidiaries for any fiscal quarter of the Company to be
less than 110% of Consolidated Debt Service of the Company and its Restricted
Subsidiaries (computed on a pro forma basis) for the four fiscal quarters
immediately succeeding the end of such fiscal quarter.
Section 4.08 Restricted Payments; Other Payment Limitations.
(a) The Company will not, and will not permit any Restricted
Subsidiary to, (i) pay or declare any dividend on any class of its capital
stock (other than dividends payable solely in capital stock of the Company or
warrants, rights or options to acquire capital stock of the Company) or make
any other distribution on account of any class of its capital stock, (ii)
retire, redeem, purchase or otherwise acquire, directly or indirectly, any
shares of any class of its capital stock or any warrants, rights or options to
acquire any such shares, or (iii) make or provide for any mandatory sinking
fund payments required in connection with any class of its capital stock (all
of the foregoing being herein called "Restricted Payments"), except that (1)
any Restricted Subsidiary may make Restricted Payments to the Company or
another Restricted Subsidiary in respect of cash and other forms of dividends
and distributions on account of any series or class of its capital stock, (2)
the Company or any Restricted Subsidiary may make cash dividends on Money
Market Preferred Stock included within the definition of Funded Debt, and (3)
the Company or any Restricted Subsidiary may make any other Restricted Payment,
provided that in each case permitted under this clause (3), (x) immediately
before and after giving effect to such Restricted Payment, no Event of Default
or Default exists or would then be continuing, and
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(y) immediately before and after giving effect to such transaction, the Company
would be permitted to incur at least $1.00 of additional Funded Debt pursuant
to Section 4.11(b).
(b) The Company will not, and will not permit any Restricted
Subsidiary to, (i) make any payment of principal, interest or premium, if any,
in respect of Subordinated Debt if (A) immediately before or after giving
effect to such payment an Event of Default or a Default exists and is
continuing, or (B) a Put Event shall have occurred (other than a Put Event with
respect to which all time periods for the purchase of Notes to be purchased at
the option of the Holders have fully expired), provided, however, that the
Company may make regularly scheduled payments with respect to Approved
Subordinated Debt in accordance with its terms as in effect on the date hereof
(but nothing herein is intended to or shall limit or restrict the subordination
terms with respect to any Approved Subordinated Debt), or (ii) make any
voluntary purchase, redemption, retirement or prepayment of principal, interest
or premium, if any, in respect of Approved Subordinated Debt if immediately
before or after giving effect to such purchase, redemption, retirement or
prepayment, as the case may be, an Event of Default or a Default exists and is
continuing.
Section 4.09 Loan and Investment Limitations.
The Company will not, and will not permit any Restricted Subsidiary
to, make or permit to remain outstanding any loan or advance to, or provide any
Guaranty (or enter into any contract or agreement which is substantially
equivalent in economic effect to a Guaranty) of the obligations of, or own,
purchase or acquire any stock, obligation or securities of, or any other
interest in, or make any capital contribution to, any person (such loan,
advance, ownership, purchase, acquisition, Guaranty and capital contribution
shall herein be referred to as an "Investment") except:
(a) the Company or any Restricted Subsidiary may endorse
negotiable instruments for collection in the ordinary course of business;
(b) the Company or any Restricted Subsidiary may make an
Investment in or with respect to any Restricted Subsidiary, except, to the
extent of any Investment by the Company or any Restricted Subsidiary in a less
than Wholly-owned Restricted Subsidiary which increases the capitalization of
the latter, and the Company or the Restricted Subsidiary making such Investment
does not receive, by agreement or otherwise, an equity interest or other
economic equivalent attributable to such Investment, such Investment to such
extent (but only to such extent) shall be deemed a Restricted Payment and may
be made only in compliance with the provisions of Section 4.08 hereof;
(c) the Company or any Restricted Subsidiary may continue to own
the Investments described and listed in Exhibit F to this Indenture;
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(d) the Company or any Restricted Subsidiary may own, purchase or
acquire commercial paper rated in the highest category of ratings by Standard &
Poor's Corporation or by Moody's;
(e) the Company or any Restricted Subsidiary may own, purchase or
acquire certificates of deposit, having maturities of less than twelve months
issued by any commercial bank located in the United States with deposits
insured by the FDIC and having combined capital, surplus and undivided profits
of at least $100,000,000;
(f) the Company or any Restricted Subsidiary may own, purchase or
acquire obligations of the United States Government or any agency thereof, and
obligations guaranteed by the United States Government or any agency thereof,
having a term of less than one year;
(g) the Company or any Restricted Subsidiary may make other
Investments, provided that (i) any such Investment is made without recourse
(other than to the extent permitted in Section 4.09(h)) to the Company or any
Restricted Subsidiary, (ii) no Event of Default or Default exists immediately
before or after giving effect to such Investment, (iii) on a pro forma basis
immediately upon making such Investment, the Company would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to Section 4.11(b), and
(iv) any such Investment shall not render the Company and its Restricted
Subsidiaries insolvent or unable to pay its or their respective debts as they
become due;
(h) the Company or any Restricted Subsidiary may incur a Guaranty,
provided that (i) the maximum liability of the Company or the Restricted
Subsidiary under any such Guaranty, together with the maximum aggregate amount
of liabilities under Guaranties then outstanding, does not exceed 10% of the
maximum aggregate amount of Short-Term Debt and Funded Debt which the Company
and its Restricted Subsidiaries would then be permitted to incur pursuant to
Section 4.11(b), (ii) the amount of the Company's or the Restricted
Subsidiary's liability under any such Guaranty can be readily quantified and
such amount shall, by the express terms of such Guaranty, be subject to a
specified limit, (iii) the maximum amount of the Company's or the Restricted
Subsidiary's liability under such Guaranties shall be deemed Short-Term Debt or
Funded Debt by the Company or the Restricted Subsidiary, as the case may be,
for all purposes under this Indenture, (iv) the Company or the Restricted
Subsidiary could incur the Short-Term Debt or Funded Debt evidenced by such
Guaranty pursuant to Section 4.11(b), (v) immediately upon incurring such
Guaranty, the Company or the Restricted Subsidiary would be permitted to incur
at least $1.00 of additional Funded Debt pursuant to Section 4.11(b), and (vi)
no Event of Default or Default exists immediately before or after giving effect
to the incurrence of such Guaranty, provided, further, that the Company or any
Restricted Subsidiary may permit to remain outstanding each such Guaranty which
was permitted to be incurred pursuant to this Section 4.09(h) notwithstanding
the fact that such Guaranty would not be permitted to be incurred thereafter;
(i) the Company or any Restricted Subsidiary may make Investments
in or with respect to any Unrestricted Subsidiary, provided that such
Investment is made in anticipation of
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the receipt of funds in the day-to-day operations of the Subsidiaries
sufficient to reimburse the Company or such Restricted Subsidiary pursuant to
the Company's normal cash management practices; and
(j) any Restricted Subsidiary may make Investments in the Company.
Section 4.10 Liens.
The Company will not, and will not permit any Restricted Subsidiary
to, create, assume or suffer to exist any Lien upon any of their respective
properties or assets, real, personal or mixed, tangible or intangible, whether
now owned or hereafter acquired, except:
(a) Company Liens. Any Restricted Subsidiary may create, incur
and suffer to exist any Lien upon all or any part of its property in favor of
the Company or any other Restricted Subsidiary as security for Indebtedness
owing to the Company or such other Restricted Subsidiary;
(b) Statutory and Good Faith Deposits. The Company and its
Restricted Subsidiaries may make and maintain in the ordinary course of
business (i) pledges or deposits under worker's compensation laws, unemployment
insurance laws or similar legislation, (ii) good faith deposits in connection
with bids, tenders, contracts (other than for the purpose of borrowing money or
obtaining credit) or leases (other than Capitalized Leases) to which the
Company or any Restricted Subsidiary is a party, including rent security
deposits, and (iii) deposits to secure public or statutory obligations of the
Company or any Restricted Subsidiary, or surety, custom or appeal bonds to
which the Company or any Restricted Subsidiary is a party, or for the payment
of contested taxes or import duties of the Company or any Restricted
Subsidiary;
(c) Statutory and Judgment Liens. The Company and its Restricted
Subsidiaries may incur and suffer to exist (i) any Lien which is imposed by
law, such as those to secure claims for labor, services and materials if
payment of the obligation secured thereby is not yet due, or the validity or
amount of which is being contested by appropriate legal proceedings and with
respect to which adequate reserves have been established in accordance with
generally accepted accounting principles, (ii) any Lien which arises out of a
judgment or award against the Company or any Restricted Subsidiary with respect
to which the Company or such Restricted Subsidiary at the time shall currently
be prosecuting an appeal or proceedings for review and with respect to which it
shall have secured a stay of execution pending such appeal or proceedings for
review, or with respect to which the Company or such Restricted Subsidiary
shall have posted a bond and established adequate reserves in accordance with
generally accepted accounting principles for the payment of such judgment or
award, and (iii) any Lien for taxes, assessments or other governmental charges
or levies not yet due or subject to penalties for non-payment, or the validity
or amount of which is being contested by appropriate legal proceedings and with
respect to which adequate reserves have been established in accordance with
generally accepted accounting principles;
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(d) Purchase Money Liens. The Company or any Restricted
Subsidiary may grant or create a Lien upon any real property or equipment or
interest therein purchased or acquired by the Company or a Restricted
Subsidiary to secure payment of a portion of the purchase price of such real
property or equipment or interest therein, provided, however, that in every
such case: (i) the outstanding principal amount of the Short-Term Debt or
Funded Debt secured by such Lien does not at any time exceed 100% of the lesser
of (x) the purchase price actually paid by the Company or any Restricted
Subsidiary for the real property or equipment or interest therein which is
encumbered by such Lien, or (y) the fair market value at the time of purchase
of such real property or equipment or interest therein which is encumbered by
such Lien, (ii) such Lien does not encumber or constitute a charge against any
other asset owned by the Company or any Restricted Subsidiary, (iii) the
Short-Term Debt or Funded Debt secured by such Lien is permitted under Section
4.11(b), and (iv) no Event of Default or Default exists immediately before or
after giving effect to each such transaction;
(e) Existing Liens. The Liens described and listed in Exhibit G
to this Indenture;
(f) Stock of Unrestricted Subsidiaries. The Company or any
Restricted Subsidiary may grant, create or suffer to exist a Lien consisting of
a pledge of its interest in any shares of any class of stock or other security
of any Unrestricted Subsidiary owned, directly or indirectly, by the Company or
such Restricted Subsidiary, provided that the Indebtedness or obligation
secured by such Lien shall be without recourse to the Company or any Restricted
Subsidiary or any of its or their other property and assets, except as would
otherwise be permitted under this Section 4.10; and
(g) Liens Equally and Ratably Securing the Notes. The Company or
any Restricted Subsidiary may create, assume or suffer to exist a Lien not
otherwise permitted by the foregoing provisions of this Section 4.10 if the
Company makes or causes to be made effective provision whereby the then
outstanding Notes (together with, if the Company shall so determine, any other
Indebtedness ranking equally with the Notes, whether then existing or
thereafter created) are secured equally and ratably with (or prior to) the
Indebtedness secured by such Lien for so long as such Indebtedness shall be so
secured. If the Notes are required to be secured pursuant to this Section
4.10(g), (i) the Company shall promptly deliver to the Trustee an Officers'
Certificate stating that the requirements of this Section 4.10(g) have been
complied with and an Opinion of Counsel with respect to the validity of the
Lien so securing the Notes, and (ii) the Trustee is hereby authorized to enter
into an indenture supplemental hereto and to take such other action, if any, as
it may deem advisable to enable it to enforce the rights of the Holders with
respect to such Lien.
Section 4.11 Indebtedness.
The Company will not, and will not permit any Restricted Subsidiary
to, incur or assume any Short-Term Debt or Funded Debt, including, without
limitation, any Guaranty, except as follows:
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(a) The Company may incur the Indebtedness evidenced by the Notes;
(b) The Company or any Restricted Subsidiary may incur or assume
Short-Term Debt or Funded Debt, provided that (i) after giving effect to such
transaction, the aggregate amount of all Senior Debt then outstanding shall not
exceed seven times Annualized Cash Flow of the Company and its Restricted
Subsidiaries for the most recent three-month period ending the month
immediately preceding such transaction (after giving effect to the inclusion of
Cash Flow derived from the use of such Short-Term Debt or Funded Debt), (ii)
after giving effect to such transaction, the aggregate amount of all Total Debt
then outstanding shall not (A) at any time prior to December 1, 1999 exceed
eight times Annualized Cash Flow of the Company and its Restricted Subsidiaries
for the most recent three-month period ending the month immediately preceding
such transaction (after giving effect to the inclusion of Cash Flow derived
from the use of such Short-Term Debt or Funded Debt), and (B) on or after
December 1, 1999 exceed seven times Annualized Cash Flow of the Company and its
Restricted Subsidiaries for the most recent three-month period ending the month
immediately preceding such transaction (after giving effect to the inclusion of
Cash Flow derived from the use of such Short-Term Debt or Funded Debt), and
(iii) immediately before and after giving effect to such transaction, no
Default or Event of Default shall exist, provided, further, that if any such
Short-Term Debt or Funded Debt is secured by Liens, such Short-Term Debt or
Funded Debt is permitted under Section 4.11(c) and, if any such Short-Term Debt
or Funded Debt is Short-Term Debt or Funded Debt of a Restricted Subsidiary,
such Short-Term Debt or Funded Debt is permitted under Section 4.11(d);
(c) The Company or any Restricted Subsidiary may incur or assume
Short-Term Debt or Funded Debt secured by Liens permitted under Section
4.10(d), provided that (i) such Short-Term Debt or Funded Debt is permitted
under Section 4.11(b), and that immediately after incurring or assuming such
Short-Term Debt or Funded Debt, the sum of the aggregate outstanding principal
amount of all Short-Term Debt and Funded Debt of the Company and the Restricted
Subsidiaries secured by Liens plus the aggregate outstanding principal amount
of all Short-Term Debt and Funded Debt of all Restricted Subsidiaries
(excluding amounts otherwise included as secured Short-Term Debt or Funded Debt
of the Company and the Restricted Subsidiaries) shall not exceed 15% of the
maximum aggregate amount of all Short-Term Debt and Funded Debt which the
Company and its Restricted Subsidiaries would then be permitted to incur
pursuant to Section 4.11(b), and (ii) immediately before and after giving
effect to such transaction, no Event of Default or Default shall exist; and
(d) A Restricted Subsidiary may incur or assume Short-Term Debt or
Funded Debt (including outstanding Funded Debt of any Unrestricted Subsidiary
at the time it is designated a Restricted Subsidiary pursuant to Section 4.03),
provided that (i) such Short-Term Debt or Funded Debt is permitted under
Section 4.11(b), and that immediately after incurring or assuming such
Short-Term Debt or Funded Debt, the sum of the aggregate outstanding principal
amount of all Short-Term Debt and Funded Debt of all Restricted Subsidiaries
plus the aggregate outstanding principal amount of all Short-Term Debt and
Funded Debt of the Company and the Restricted Subsidiaries secured by Liens
permitted under Section 4.10(d) (excluding amounts otherwise included as
Short-Term Debt or Funded Debt of the Restricted Subsidiaries) shall not
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exceed 15% of the maximum aggregate amount of all Short-Term Debt and Funded
Debt which the Company and its Restricted Subsidiaries would then be permitted
to incur pursuant to Section 4.11(b), and (ii) immediately before and after
giving effect to such transaction, no Event of Default or Default shall exist.
Section 4.12 Indebtedness to Unrestricted Subsidiaries.
The Company will not, and will not permit any Restricted Subsidiary
to, make any payment (including prepayments and purchases) under or in respect
of Indebtedness for borrowed money owing to and held by an Unrestricted
Subsidiary or a Restricted Subsidiary which is not a Wholly-owned Restricted
Subsidiary if, immediately before or after giving effect to such payment, (x)
an Event of Default or a Default shall have occurred and be continuing, (y) on
a pro forma basis, and after giving immediate effect to such transaction, the
Company would not be permitted to incur at least $1.00 of additional Funded
Debt pursuant to Section 4.11(b), or (z) a Put Event shall have occurred (other
than a Put Event with respect to which all time periods for the purchase of
Notes to be purchased at the option of the Holders have expired), provided,
however, that the Company may reimburse the Subsidiaries for expenditures made
in the day-to-day operations of the Subsidiaries pursuant to the Company's
normal cash management practices.
Section 4.13 Mergers and Acquisitions.
The Company will not, and will not permit any Restricted Subsidiary
to, merge or consolidate with or acquire the stock or assets of any person,
except:
(a) The Company may consolidate with or merge into any person,
provided that (i) the person formed by such consolidation or into which the
Company is merged shall be a corporation organized and existing under the laws
of the United States, any State thereof or the District of Columbia and shall
expressly assume, by supplemental indenture, all the obligations of the Company
under the Notes and this Indenture, (ii) on a pro forma basis, and after giving
immediate effect to such transaction, no Event of Default or Default shall
exist, and (iii) on a pro forma basis, and after giving immediate effect to
such transaction, such successor corporation would be permitted to incur at
least $1.00 of additional Funded Debt pursuant to Section 4.11(b);
(b) The Company or a Restricted Subsidiary may merge with, or
acquire all or substantially all of the stock or assets of, any person other
than a Restricted Subsidiary in a transaction in which the Company or the
Restricted Subsidiary shall be the surviving or continuing corporation,
provided that (i) the Company or the Restricted Subsidiary shall assume all
outstanding Indebtedness of the non-surviving or acquired person with respect
to which the Company or the Restricted Subsidiary could be held legally liable,
or which could be satisfied from any assets of the Company or the Restricted
Subsidiary, and such Indebtedness would then be permitted as additional Funded
Debt under Section 4.11(b), (ii) on a pro forma basis, and after giving
immediate effect to such transaction, such transaction would not result in a
violation of Section 4.16, (iii) on a pro forma basis, and after giving
immediate effect to such transaction and
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the incurrence or assumption of such Indebtedness by the Company or the
Restricted Subsidiary, no Event of Default or Default shall exist, and (iv) on
a pro forma basis, and after giving immediate effect to such transaction, the
Company would be permitted to incur at least $1.00 of additional Funded Debt
pursuant to Section 4.11(b);
(c) (i) A Restricted Subsidiary may merge into the Company and may
merge into or consolidate with another Restricted Subsidiary, (ii) a Restricted
Subsidiary may sell, lease or otherwise dispose of all or substantially all of
its assets to the Company or another Restricted Subsidiary, and (iii) the
Company or any Restricted Subsidiary may acquire the stock or assets of any
other Restricted Subsidiary, provided, however, that the Company may not merge
with, a Restricted Subsidiary may not merge into or consolidate with, and
neither the Company nor a Restricted Subsidiary may purchase or otherwise
acquire all or substantially all of the stock or assets of, a Restricted
Subsidiary, other than a Wholly-owned Restricted Subsidiary, unless any
Indebtedness or other obligation to purchase or otherwise provide compensation
for all or any part of the stock or assets of, or any interest in, such other
Restricted Subsidiary not then owned by the Company or the Restricted
Subsidiary surviving such merger or consolidation or making such acquisition,
as the case may be, incurred or to be incurred in connection with such
transaction would then be permitted as additional Funded Debt under Section
4.11(b);
(d) The Company or a Restricted Subsidiary may, in the ordinary
course of its business, acquire assets of any person, other than assets which
constitute all or any substantial part of the assets of such person; and
(e) The Company or a Restricted Subsidiary may make acquisitions
of the stock or assets of any person permitted under Section 4.09.
Section 4.14 Sale of Assets.
The Company will not, and will not permit any Restricted Subsidiary
to, sell, lease, transfer or otherwise dispose of any of its properties and
assets (including pursuant to an order, judgment or decree requiring the
divestiture of assets) outside of the normal course of business as presently
conducted, except that the Company or a Restricted Subsidiary may sell, lease,
transfer or otherwise dispose of less than substantially all of its assets
(including stock or Indebtedness of a Restricted Subsidiary as provided herein)
to any person other than a Restricted Subsidiary, provided that in each such
case (i) the Company or such Restricted Subsidiary receives consideration which
represents the fair market value of such assets at the time of such sale or
disposition, (ii) any such sale or disposition shall be on a non-recourse basis
(except to the extent permitted under Section 4.09(h) and except that the
Company or such Restricted Subsidiary may make representations and warranties
with respect to such properties or assets which are normal and customary in the
cable television business), (iii) no Event of Default or Default shall have
occurred and be continuing either before or after the consummation of such
transaction, and (iv) after giving effect to such transaction, the Company
would be permitted to incur at least $1.00 of additional Funded Debt pursuant
to Section 4.11(b), and provided, further that:
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(x) In the case of a sale or disposition of an asset or group of
assets (other than as provided in clauses (y) or (z) below), the following
conditions are satisfied: (A) during the twelve-month period ending the month
immediately preceding the month in which the proposed sale or disposition
occurs, the sum of the Annualized Cash Flow attributable to the assets to be
sold or disposed of by the Company or any Restricted Subsidiary for the
three-month period ending the month immediately preceding the month in which
such sale or disposition would occur, plus the Annualized Cash Flow
attributable to all other assets sold or disposed of by the Company or any
Restricted Subsidiary during such twelve-month period for the three-month
period ending the month immediately preceding the month in which the respective
sales or dispositions occurred, does not exceed 15% of the Annualized Cash Flow
of the Company and its Restricted Subsidiaries for the three-month period
ending the month immediately preceding the month in which the proposed sale or
disposition occurs, including the Annualized Cash Flow for the same three-month
period related to any Unrestricted Subsidiary or to any Subsidiary which is
acquired by the Company or a Restricted Subsidiary which in each case is
designated to be a Restricted Subsidiary pursuant to Section 4.03 during the
same calendar month as the proposed sale or disposition; and (B) on a
cumulative basis in respect of all assets sold or disposed of by the Company or
any Restricted Subsidiary during the five-year period ending the month
immediately preceding the month in which any proposed sale or disposition would
occur, the sum of the Annualized Cash Flow attributable to each such asset so
sold or disposed of for the three- month period ending the month immediately
preceding the month in which such asset was so sold or disposed of does not, in
the aggregate, exceed 40% of the Annualized Cash Flow of the Company and its
Restricted Subsidiaries for the three-month period ending the month immediately
preceding the month in which the proposed sale or disposition would occur,
including the Annualized Cash Flow for the same three-month period related to
any Unrestricted Subsidiary or to any Subsidiary which is acquired by the
Company or a Restricted Subsidiary which in each case is designated to be a
Restricted Subsidiary pursuant to Section 4.03 during the same calendar month
as the proposed sale or disposition; or
(y) In the case of a trade or exchange of an asset or group of
assets, the following conditions are satisfied: (A) the assets received by the
Company or the Restricted Subsidiary are free of any Liens except as permitted
under Section 4.10; (B) during the twelve-month period ending the month
immediately preceding the month in which the proposed exchange transaction
occurs, the sum of the Annualized Cash Flow attributable to the assets to be
exchanged by the Company or any Restricted Subsidiary for the three-month
period ending the month immediately preceding the month in which such exchange
transaction would occur, plus the Annualized Cash Flow attributable to all
other assets exchanged by the Company or any Restricted Subsidiary during such
twelve-month period for the three-month period ending the month immediately
preceding the month in which the respective exchange transactions occurred,
does not exceed 15% of the Annualized Cash Flow of the Company and its
Restricted Subsidiaries for the three-month period ending the month immediately
preceding the month in which the proposed exchange transaction occurs,
including the Annualized Cash Flow for the same three-month period related to
any Unrestricted Subsidiary or to any Subsidiary which is acquired by the
Company or a Restricted Subsidiary which in each case is designated to be a
Restricted Subsidiary pursuant to Section 4.03 during the same calendar month
as the proposed exchange
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transaction; (C) on a cumulative basis in respect of all assets exchanged by
the Company or any Restricted Subsidiary during the five-year period ending the
month immediately preceding the month in which any proposed exchange
transaction would occur, the sum of the Annualized Cash Flow attributable to
each such asset so traded or exchanged for the three-month period ending
the month immediately preceding the month in which such asset was so traded or
exchanged does not, in the aggregate, exceed 40% of the Annualized Cash Flow of
the Company and its Restricted Subsidiaries for the three-month period ending
the month immediately preceding the month in which the proposed exchange
transaction would occur, including the Annualized Cash Flow for the same
three-month period related to any Unrestricted Subsidiary or to any Subsidiary
which is acquired by the Company or a Restricted Subsidiary which in each case
is designated to be a Restricted Subsidiary pursuant to Section 4.03 during the
same calendar month as the proposed exchange transaction; (D) such transaction
shall not render the Company and its Restricted Subsidiaries insolvent or
generally unable to pay its or their respective debts as they become due; (E)
the Company notifies the Trustee of such trade or exchange (such notice to
include information comparing the assets being traded or exchanged and the
methodology used to establish the equated values, provided, however, that the
Trustee shall have no duty whatsoever to verify the information contained in
such notice); and (F) in the case of a trade or exchange of an asset or group
of assets, in one transaction or a series of related transactions, in which the
sum of the Annualized Cash Flows attributable to the assets traded or exchanged
by the Company or any Restricted Subsidiary for the three-month period ending
the month immediately preceding the month in which such exchange transaction
(or, if a series of transactions, the last transaction) would occur exceeds 5%
of the Annualized Cash Flow of the Company and its Restricted Subsidiaries for
such three-month period, the assets received by the Company or the Restricted
Subsidiary in such exchange transaction shall be assets used in the CATV
Business; or
(z) In the case of the sale or other disposition of any shares of
stock, any Indebtedness or any security of a Restricted Subsidiary, the
following conditions are satisfied: (A) all shares of stock, all Indebtedness
and all securities of such Restricted Subsidiary at the time owned by the
Company or by any other Restricted Subsidiary are sold or otherwise disposed of
to a person other than the Company or any Restricted Subsidiary; (B)
immediately after each such sale or other disposition, such Restricted
Subsidiary shall not own, directly or indirectly, any shares of stock, any
Indebtedness or any security of the Company or of any other Restricted
Subsidiary; and (C) such sale or other disposition would then be permitted
under clauses (x) or (y) above in this proviso clause, as the case may be.
Nothing contained in this Section 4.14, however, is intended to prohibit the
sale, transfer or other disposition by the Company or any Restricted Subsidiary
of all or any part of the assets and property, or of any shares of stock, any
Indebtedness or any security, of any Unrestricted Subsidiary, provided that any
such sale, transfer or disposition shall, in respect of any Indebtedness or
obligation related thereto, be without recourse to the Company or any
Restricted Subsidiary, or any of its or their other property and assets except
as would be permitted under Section 4.10. Further, nothing contained in this
Section 4.14 is intended to prohibit the making
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of any Restricted Payment permitted by Section 4.08 or any Investment permitted
by Section 4.09.
Section 4.15 Sale or Discount of Receivables.
The Company will not sell with recourse, or discount or otherwise sell
for less than the face value thereof, any of its notes or accounts receivable,
or permit any Restricted Subsidiary to do so; provided that the foregoing is
not intended, nor shall it be construed, to restrict the Company or any
Restricted Subsidiary from entering into arrangements that permit its
subscribers to charge, by personal credit card, subscriber fees or other
charges to the extent permitted pursuant to the Company's or the Restricted
Subsidiaries' ordinary and customary business practices.
Section 4.16 Limitation on Other Business.
The Company will not, during any three-month period, permit less than
80% of the total Gross Revenues of the Company and its Restricted Subsidiaries
to be derived from the acquisition, ownership, expansion, operation and
maintenance of a CATV Business.
Section 4.17 ERISA.
The Company covenants that so long as any of the Notes are
outstanding, the Company will not, and will not permit any Restricted
Subsidiary to: (a) terminate or withdraw from any Plan so as to result in any
material liability to the PBGC; (b) engage in or permit any person to engage in
any Prohibited Transaction involving any Plan which would subject the Company
to any material tax, penalty or other liability; (c) incur or suffer to exist
any material Accumulated Funding Deficiency, whether or not waived, involving
any Plan; or (d) allow or suffer to exist any event or condition which presents
a material risk of incurring a material liability to the PBGC. For the purpose
of this Section 4.17 only, a tax, penalty or other liability shall be
considered material if it is in excess of 5% of Consolidated Net Earnings of
the Company and its Restricted Subsidiaries and such tax, penalty or other
liability is not covered in full by insurance.
Section 4.18 Consolidated Tax Returns.
The Company will not file, or consent to the filing of, any
consolidated income tax return with any person other than a subsidiary, unless
the Company shall become a subsidiary of, or controlled by or under common
control with, or is merged into or consolidated with any person, including,
without limitation, any Affiliate, in which event the Company shall be liable
for and pay no more tax than would be payable by the Company if the Company
were not a subsidiary of, or under the control of or under common control with,
or had not been merged into or consolidated with, such person.
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Section 4.19 Disposition of Stock and Indebtedness of Restricted
Subsidiaries.
The Company will not, and will not permit any Restricted Subsidiary
to, sell or otherwise dispose of any shares of stock or any Indebtedness of a
Restricted Subsidiary, except (a) to the Company or to a Restricted Subsidiary,
and (b) as permitted under Section 4.08, 4.13 or 4.14.
Section 4.20 Transactions With Affiliates.
The Company will not, and will not permit any Restricted Subsidiary
to, (a) make any loan or advance or otherwise extend credit to any of their
respective Affiliates, or (b) enter into any other transaction with any of
their respective Affiliates, if the terms and conditions of such loan, advance,
extension of credit or other transaction are, at the time of the making or
entering into of any thereof, less favorable to the Company or such Restricted
Subsidiary in any material respect than the terms and conditions which would
apply in a similar transaction with a person other than such Affiliate,
provided, however, that this Section 4.20 shall not apply to (i) loans or
advances made by the Company or any Restricted Subsidiary to an Unrestricted
Subsidiary which are permitted to be incurred under Section 4.09, (ii)
management services rendered by the Company or any Restricted Subsidiary in the
ordinary course of business to CATV Systems of Affiliates for which services
the Company or such Restricted Subsidiary is fully and fairly compensated on a
current basis by such Affiliate, (iii) any transaction involving the Company
and one or more Restricted Subsidiaries, exclusively, (iv) any transaction
involving two or more Restricted Subsidiaries, exclusively, (v) any transaction
approved by the Board of Directors as being fair and reasonable and in the best
interest of the Company involving the Company and one or more of its directors,
officers or employees with respect to their compensation or incentives to
continued service with the Company, or (vi) any Restricted Payment permitted
pursuant to Section 4.08.
Section 4.21 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Section 4.03 or in Sections 4.07 to
4.20, inclusive, with respect to the Notes if before the time for such
compliance a Majority-in-Interest of Holders of the Notes shall either waive
such compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect. In the case of a Prohibited Act or Increased
Debt Capacity for which the consent of a Majority-in-Interest of Holders of the
Notes was solicited by the Company and not received, if the Company exercises
its right to redeem all and not less than all the Non-Consenting Notes pursuant
to paragraph 7 of the Notes and Section 3.02 and has deposited with the Paying
Agent or, if the Company is acting as Paying Agent, has set aside and
segregated in trust, money sufficient to pay the aggregate redemption price of
such Non-Consenting Notes, then the Holders shall be deemed to have consented
to the taking of or engaging in such Prohibited Act or Increased Debt Capacity,
as applicable, and the Company's
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non-compliance with any term, provision or condition set forth in this Article
that would otherwise be inconsistent therewith.
Section 4.22 No Lien Created.
This Indenture and the Notes do not create a Lien on any property of
the Company or any Subsidiary.
ARTICLE V.
DEFAULTS AND REMEDIES
Section 5.01 Events of Default.
An "Event of Default" with respect to the Notes of any series means
any of the following:
(a) the Company shall default in the payment or prepayment of (i)
any principal of or premium on any Note of such series when the same shall
become due, either by the terms thereof or otherwise as herein provided, or
(ii) any interest on any Note of such series when the same shall become due,
either by the terms thereof or otherwise as herein provided, and such default
as to interest shall remain unremedied for five days; or
(b) any of the Restricted Group fails to pay any part of the
principal of, the premium, if any, or the interest on, or any other payment of
money due under, any of its Indebtedness (other than the Notes of such series)
or any Capitalized Lease with respect to which it is obligated, having a then
outstanding aggregate principal amount (in the case of Indebtedness) or
relating to property or other assets having an aggregate value (in the case of
a Capitalized Lease) of $10,000,000 or more, beyond any period of grace with
respect thereto; or any of the Restricted Group fails to perform or observe any
other agreement, term or condition contained in any document evidencing or
securing such Indebtedness, or in such Capitalized Lease, or in any agreement
under which any such Indebtedness was issued or created, in each case, if the
effect of such failure is to cause, or permit the holders of such Indebtedness
(or a trustee on behalf of such holders) to cause, or permit any other party to
such Capitalized Lease to cause, any payment in respect of such Indebtedness or
such Capitalized Lease to become due prior to its stated date of maturity,
whether or not such failure or default is waived by, or on behalf of, the
holders of such Indebtedness or by any other party to such Capitalized Lease;
or
(c) any representation or warranty made in any certificate
delivered to the Trustee by the Company in connection with or pursuant to this
Indenture shall prove to be false or misleading in any material respect on the
date as of which made; or
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(d) the Company shall fail to perform or observe any of its other
agreements or covenants contained in this Indenture or in the Notes and such
failure continues for the period and after the notice specified below; or
(e) the Company or any Restricted Subsidiary shall be adjudicated
a debtor or insolvent, or generally not pay its debts as they become due
(within the meaning of 11 U.S.C. Section 303(h) as at any time amended or any
successor statute thereto), or make an assignment for the benefit of creditors;
or shall apply for or consent to the appointment of a custodian, receiver,
trustee, or similar officer for it or for all or any substantial part of its
property; or such custodian, receiver, trustee or similar officer shall be
appointed without its application or consent and such appointment remains in
effect for more than 90 days; or shall institute (by petition, application,
answer, consent or otherwise) any bankruptcy, insolvency, reorganization,
moratorium, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or any
such proceeding shall be instituted (by petition, application or otherwise)
against any of them and such proceeding remains undismissed for more than 90
days; or
(f) any order, judgment or decree shall be entered in any
proceedings against the Company or any Restricted Subsidiary decreeing the
dissolution of the Company or such Restricted Subsidiary and such order,
judgment or decree remains unstayed and in effect for more than 90 days; or
(g) any final judgment for the payment of money shall be rendered
by any court or other governmental body or by any arbitrator against the
Company or any Restricted Subsidiary or any judgment, writ of attachment, or
similar process shall be issued or levied against a substantial part of its and
their property or assets, taken as a whole, and such judgment, writ or other
order shall not be discharged within 90 days from the date of entry thereof or
within such longer period as the execution of such judgment shall have been
stayed, and such judgment, together with all other such judgments, exceeds in
the aggregate $10,000,000; or
(h) (i) any Reportable Event or Prohibited Transaction shall occur
with respect to any Plan; (ii) a notice of intent to terminate a Plan under
Section 4041 of ERISA shall be filed; (iii) a notice shall be received by the
plan administrator of a Plan that the PBGC has instituted proceedings to
terminate a Plan or appoint a trustee to administer a Plan; (iv) any other
event or condition shall exist which would constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (v) the Company or any ERISA Affiliate shall withdraw
from a Multi-employer Plan under circumstances that would have a material
adverse effect on the financial condition of the Company, and in the case of
the occurrence of any event or condition described in clauses (i) through (v)
above, such event or condition would result in the aggregate amount of the
Company's or a Restricted Subsidiary's liability to a Plan or a Multi- employer
Plan or to the PBGC under Sections 4062, 4063, 4064, 4201, or 4202 of ERISA
being in excess of 5% of Consolidated Net Earnings of the Company and its
Restricted Subsidiaries, and such liability shall not be covered in full by
insurance.
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A Default under Section 5.01(d) is not an Event of Default until the
Trustee notifies the Company or the Holders of at least 25% in aggregate unpaid
principal amount of the Notes notify the Company and the Trustee of the Default
and the Company does not cure the Default within 30 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
Section 5.02 Acceleration.
If an Event of Default (other than an Event of Default specified in
Section 5.01(a), 5.01(e) or 5.01(f)) occurs and is continuing with respect to
outstanding Notes, the Trustee by notice to the Company, or a
Majority-in-Interest of Holders of the Notes by notice to the Company and the
Trustee, may declare to be due and payable immediately (1) the unpaid principal
amount of all of the Notes then outstanding and (2) interest accrued thereon to
the date of acceleration. Upon such declaration, such principal amount and
interest shall be due and payable immediately. If an Event of Default
specified in Section 5.01(a) occurs and is continuing with respect to the Notes
of any series, a Majority-in-Interest of Holders of Notes of that series by
notice to the Trustee and the Company may declare to be due and payable
immediately (1) the unpaid principal amount of all of the Notes of such series
then outstanding and (2) interest accrued thereon to the date of acceleration,
whereupon such principal amount and interest shall be due and payable
immediately. If an Event of Default specified in Section 5.01(e) or 5.01(f)
occurs and is continuing, (1) the unpaid principal amount of all of the Notes
then outstanding and (2) interest accrued thereon to the date of such
acceleration, shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or the Holders of Notes.
Upon the acceleration of Notes of any series as permitted or provided in this
Article V, except an acceleration provided for in the immediately preceding
sentence, in addition to the unpaid principal amount and interest required to
be paid by the Company in accordance with the terms of the Notes of such
series, the Company shall also pay, without duplication and to the extent
permitted by law, a premium on the entire unpaid principal amount of each
outstanding Note of such series equal to the maximum premium that would have
been payable in accordance with paragraph 6 of the Notes of such series if such
Note were then being prepaid in full at the option of the Company in accordance
with said paragraph 6 (whether or not optional prepayment would then be
permitted thereunder and calculated without regard to the proviso clause to the
first sentence of said paragraph). The Holders of not less than 66 2/3% in
aggregate unpaid principal amount of the outstanding Notes (or, in the case of
an acceleration of the Notes of a particular series as provided in the third
sentence of this Section 5.02, the outstanding Notes of the series with respect
to which the acceleration applies) by notice to the Trustee may rescind an
acceleration and its consequences with respect to the Notes if all existing
Events of Default (other than the non- payment of the principal amount of,
premium and accrued interest on the Notes that have become due solely by such
acceleration) with respect to the Notes have been cured or waived and if the
rescission would not conflict with any judgment or decree. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
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Section 5.03 Other Remedies.
If an Event of Default with respect to the Notes of any series occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of the whole amount which then shall
have become due and remain unpaid for principal, premium, if any, or interest
on the Notes of that series or to enforce the performance of any provision of
the Notes of that series or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 5.04 Waiver of Existing Defaults.
Subject to Section 8.02, a Majority-in-Interest of Holders of the
Notes by notice to the Trustee may waive on behalf of the Holders of all the
Notes an existing Default or Event of Default and its consequences. When a
Default or Event of Default is waived, it is cured and stops continuing.
Section 5.05 Control by Majority.
A Majority-in-Interest of Holders of the Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it, with respect to the
Notes. The Trustee, however, may refuse to follow any direction that conflicts
with law or this Indenture, that is unduly prejudicial to the rights of another
Noteholder or that would involve the Trustee in personal liability.
Section 5.06 Limitation on Suits.
No Holder of any Note shall have the right to pursue any remedy with
respect to this Indenture or the Notes unless: (1) the Holder gives to the
Trustee written notice of a continuing Event of Default with respect to the
Notes; (2) the Holders of at least 25% in aggregate unpaid principal amount of
the outstanding Notes make a written request to the Trustee to pursue the
remedy; (3) such Holder or Holders offer and provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense; (4) the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer of indemnity; and (5) no direction inconsistent with such
written request has been given to the Trustee during such 60-day period by a
Majority-in-Interest of Holders of the Notes. A Holder may not use this
Indenture to prejudice the rights of another Noteholder or to obtain a
preference or priority over another Noteholder, except in the manner herein
provided and for the equal and ratable benefit of all Noteholders.
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Section 5.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payments with respect to the principal amount
of, premium, if any, and (subject to Section 2.10) interest on the Note, on or
after the respective due dates with respect to such payments expressed in such
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates shall not be impaired or affected without the consent of the
Holder.
Section 5.08 Collection Suit by Trustee.
If an Event of Default specified in Section 5.01(a) above occurs and
is continuing with respect to the Notes of any series, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount which then shall have become due and remain unpaid with
respect to the principal amount of, premium, if any, and interest on such
Notes.
Section 5.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Noteholders allowed in any judicial proceedings relative to the
Company, its creditors or its property and to collect and receive money,
property or securities payable or deliverable on any such claims and to
distribute the same.
Section 5.10 Priorities.
Any money collected by the Trustee pursuant to this Article V shall be
applied in the following order, at the date or dates fixed by the Trustee and
upon presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid: First: to the Trustee
for amounts due it pursuant to this Indenture; Second: to the payment of
amounts due and unpaid for principal, premium, if any, and interest on the
Notes in respect of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts which then shall
have become due and payable on the Notes for principal, premium, if any, and
interest, respectively; and Third: to the Company. The Trustee may fix a
record date for any payment to Noteholders pursuant to this Section, notice of
which shall be mailed to each Noteholder by the Company at least 15 days before
such record date.
Section 5.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims
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or defenses made by the party litigant. This Section does not apply to a suit
by the Trustee, a suit by a Holder pursuant to Section 5.07 or a suit by
Holders of more than 10% in aggregate unpaid principal amount of the
outstanding Notes.
ARTICLE VI.
TRUSTEE
All the provisions of this Article VI apply to the Trustee acting in
all its appointed capacities pursuant to this Indenture unless any provision
specifically applies to the Trustee only in its capacity as Trustee.
Section 6.01 Duties of Trustee.
(a) If an Event of Default with respect to Notes of any series has
occurred and is continuing, the Trustee shall with respect to such series
exercise such of the rights and powers vested in it by this Indenture with
respect to such series and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) With respect to Notes of any series, except during the
continuance of an Event of Default with respect to the Notes of such series:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture or the TIA and no others.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. The Trustee, however, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, shall be under
a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts
stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts.
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(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.05.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee may refuse to
perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 6.02 Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection or require an Officers' Certificate, an
Opinion of Counsel and/or an accountant's certificate. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Certificate, Opinion or accountant's certificate.
(c) The Trustee may act through agents and counsel and shall not
be responsible for the misconduct or negligence of any agent or counsel
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
Section 6.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 6.10 and 6.11.
Section 6.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes and it shall not be responsible for any statement
in this Indenture or the Notes other than its certificate of authentication.
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Section 6.05 Notice of Defaults.
If a Default occurs and is continuing with respect to Notes of any
series and if it is known to a Trust Officer of the Trustee, the Trustee shall
transmit by mail to the Holders of Notes of such series, in the manner and to
the extent provided in TIA Section 313(c), notice of the Default within 90
days after it occurs or as soon as reasonably practicable thereafter. Except
in the case of a default in payment of principal of, premium, if any, or
interest on any Note of such series, the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Noteholders of such series.
Section 6.06 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date on which Notes are originally issued under this Indenture, the Trustee
shall transmit by mail to the Holders of Notes, in the manner and to the extent
provided in TIA Section 313(c), a brief report dated as of such May 15 that
complies with TIA Section 313(a), if such report is required by TIA Section
313. The Trustee also shall comply with TIA Section 313(b). A copy of each
report at the time of its mailing to Holders shall be filed by the Company with
the SEC and with each stock exchange, if any, on which the Notes are listed.
The Company will promptly notify the Trustee if and when the Notes of any
series are listed on any stock exchange.
Section 6.07 Compensation and Indemnity.
The Company shall pay to the Trustee such compensation as shall have
been agreed upon in writing. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee or any predecessor
Trustee against any loss or liability incurred by it arising out of or in
connection with the acceptance or administration of this trust and its duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. Failure of the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall have the right to elect to defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its written
consent. The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through the Trustee's negligence or
bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal of,
premium, if any, or interest on particular Notes.
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When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.01(e) or 5.01(f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any applicable bankruptcy law.
Section 6.08 Replacement of Trustee.
The Trustee may resign at any time with respect to the Notes (or the
Notes of any particular series) by so notifying the Company. A
Majority-in-Interest of Holders of the Notes (or the Notes of any particular
series) may remove the Trustee with respect to the Notes (or the Notes of such
series) by so notifying the removed Trustee and may appoint a successor Trustee
with the Company's consent. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 6.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, with respect to the Notes of all series or
any one or more series, the Company shall promptly appoint a successor Trustee
or Trustees (it being understood that any such successor Trustee may be
appointed with respect to the Notes of one or more or all of such series and
that at any time there shall be only one Trustee with respect to the Notes of
any particular series).
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee to
the successor Trustee (subject to the lien, if any, provided for in Section
6.07), the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall give
notice in the manner provided in Section 9.02 of its succession to each
Noteholder.
If a successor Trustee with respect to the Notes (or the Notes of a
particular series) does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or a
Majority-in-Interest of Holders of the Notes (or the Notes of the particular
series) may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
If the Trustee fails to comply with Section 6.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
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Section 6.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation or national banking association, the successor corporation or
national banking association without any further act shall be the successor
Trustee.
Section 6.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a). The Trustee shall always have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. With respect to the Notes of each
series, the Trustee shall comply with TIA Section 310(b). In determining
whether the Trustee has a conflicting interest as defined in TIA Section
310(b) with respect to the Notes of any series, there shall be excluded this
Indenture with respect to Notes of any particular series other than that
series. Nothing herein shall prevent the Trustee from filing with the SEC the
application referred to in the second to last paragraph of TIA Section 310(b).
Section 6.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VII.
DISCHARGE OF INDENTURE
Section 7.01 Termination of Company's Obligations.
Except as otherwise provided in this Section 7.01, the Company may
terminate all of its obligations under the Notes of any series and this
Indenture with respect to the Notes of such series if either
(1) all Notes of such series previously authenticated and
delivered (other than (i) destroyed, lost or wrongfully-taken Notes
which have been replaced or paid as provided in Section 2.07, or (ii)
Notes for whose payment money has theretofore been held in trust and
thereafter repaid to the Company as provided in Section 7.03) have
been delivered to the Trustee for cancellation; or
(2) (a) the Notes of such series mature within one year
or are to be prepaid in full within one year under arrangements
satisfactory to the Trustee for the giving of notice of such
prepayment or notice of redemption of all of the outstanding Notes of
such series has been duly given pursuant to this Indenture and (b) the
Company irrevocably deposits
53
<PAGE> 61
in trust with the Trustee (or another trustee satisfying the
requirements of Section 6.10) money or U.S. Government Obligations or
a combination thereof sufficient to pay the unpaid principal amount
of, premium, if any, and interest on all Notes of such series
previously authenticated and delivered, and not theretofore cancelled
or delivered to the Trustee for cancellation (other than any such Note
referenced in the parenthetical in clause (1) above) to maturity,
prepayment or redemption, as the case may be.
With respect to the foregoing clause (1), the Company's obligations
under Sections 6.07 and 7.03 shall survive with respect to the Notes of such
series. With respect to the foregoing clause (2), the Company's obligations in
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 6.07, 6.08, 7.03 and 7.04 shall survive
until the Notes of such series are no longer outstanding. Thereafter the
Company's obligations in Sections 6.07 and 7.03 shall survive. Notwithstanding
the satisfaction and discharge of this Indenture with respect to the Notes of
any series, if money or U.S. Government Obligations shall have been deposited
with the Trustee pursuant to clause (2) of this Section, the obligations of the
Trustee under Section 7.02 and the second sentence of Section 7.03 shall
survive.
After any such irrevocable deposit and if all other conditions thereto
are met with respect to the Notes of any series, the Trustee shall be required
to execute an instrument acknowledging satisfaction and discharge of this
Indenture with respect to the Notes of such series, except for those surviving
obligations specified above.
In order to have money available on a payment date to pay the unpaid
principal amount of, premium, if any, or interest on the Notes, the U.S.
Government Obligations shall be payable as to principal or interest on or
before such payment date in such amounts as will provide the necessary money.
U.S. Government Obligations shall not be callable at the issuer's option.
Section 7.02 Application of Trust Fund.
The Trustee shall hold in trust money and U.S. Government Obligations
deposited with it pursuant to Section 7.01. It shall apply the deposited money
and the money from the U.S. Government Obligations through the Paying Agent and
in accordance with the provisions of the Notes and this Indenture to the
payment of the unpaid principal amount of, premium, if any, and interest on the
Notes for the payment of which such money or U.S. Government Obligations has
been deposited with the Trustee. The Company shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 7.01 or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.
54
<PAGE> 62
Section 7.03 Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company
upon written request any excess money held by them at any time. The Trustee
and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal, premium, if any, or interest that
remains unclaimed for two years. After that, Holders entitled to the money
must look to the Company for payment unless an applicable abandoned property
law designates another person.
Section 7.04 Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 7.01 by reason of any
order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Notes of the series with respect to
which the deposit was made pursuant to Section 7.01 shall be revived and
reinstated as though no deposit had occurred pursuant to Section 7.01 until
such time as the Trustee or Paying Agent is permitted to apply all such money
or U.S. Government Obligations in accordance with Section 7.01; provided,
however, that if the Company makes any payment of principal, premium, if any,
or interest on any Note of such series following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
Notes of such series to receive such payment from the money or U.S. Government
Obligations held by the Trustee or the Paying Agent.
ARTICLE VIII.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01 Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or
the Notes of any series without notice to or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 4.13(a);
(3) to secure the Notes pursuant to the requirements of
Section 4.10(g), including to provide for the receipt and holding of
any security to which the Holders are entitled under Section 4.10(g)
and to release such security and the Lien of the Holders in accordance
with the provisions of Section 4.10(g);
55
<PAGE> 63
(4) to provide for uncertificated Notes in addition to
certificated Notes (so long as any "registration-required obligation"
within the meaning of Section 163(f)(2) of the Code is in registered
form for purposes of the Code);
(5) to make any change that, in the good faith opinion of
the Board of Directors, does not materially adversely affect the
rights of any Noteholder; or
(6) to comply with any requirement of the SEC in
connection with the qualification of this Indenture under the TIA.
Section 8.02 With Consent of Holders.
Except as provided below, the Company and the Trustee may amend or
supplement this Indenture or the Notes of any series without notice to any
Holder but with the consent of a Majority-in-Interest of Holders of the Notes
of the series or all of the series, as applicable, affected by such amendment
or supplement, by Act of said Holders delivered to the Trustee. Except as
provided below, a Majority-in-Interest of Holders of the Notes of the series or
all of the series, as applicable, affected by such waiver, by Act of said
Holders delivered to the Trustee, may on behalf of all Holders of Notes of such
series or all of the series, as applicable, waive compliance by the Company
with any provision of this Indenture or of such Notes or all of the Notes, as
applicable, without notice to any Noteholder. Without the consent of the
Holder of each outstanding Note of the series affected thereby, however, an
amendment, supplement or waiver, including a waiver pursuant to Section 5.04,
as to or affecting the Notes of such series may not:
(1) reduce the proportion of the unpaid principal amount
of Notes of such series whose Holders must consent to an amendment,
supplement or waiver;
(2) reduce the rate of or extend the time for payment of
interest on any Note of such series;
(3) reduce the principal amount of (or any premium
payable upon the prepayment, redemption or acceleration of) or extend
the fixed maturity of any Note of such series;
(4) change the amount or time of any payment of a
Principal Installment required by paragraph 2 of the Notes of such
series;
(5) make any change that materially adversely affects the
right of a Holder to require the Company to purchase a Note in
accordance with the terms thereof and Section 3.08;
56
<PAGE> 64
(6) change the allocation of any prepayment among the
Notes of such series or between the Notes of such series and the Notes
of another series as required by Section 3.01;
(7) waive a default in the payment of principal of,
premium, if any, or interest on such Note; or
(8) make such Note payable in money other than that
stated in the Note.
Further, without the consent of the Holders of Notes of all series
then outstanding, an amendment, supplement or waiver may not reduce the
proportion of the aggregate unpaid principal amount of the outstanding Notes of
all series whose Holders must consent to any amendment, supplement or waiver.
It shall not be necessary for the Act of the Holders under this
Section to approve the particular form of any proposed supplement or amendment,
but it shall be sufficient if such Act approves the substance thereof.
An amendment to or supplement of this Indenture which changes or
eliminates any covenant or other provision of this Indenture which has
expressly been included solely for the benefit of one or more particular series
of Notes, or which modifies the rights of the Holders of Notes of such series
with respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Notes of any other series.
Section 8.03 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.
Section 8.04 Effect of Amendments and Supplements.
Upon the execution of any amendment or supplement authorized pursuant
to this Article, this Indenture shall be modified in accordance therewith, and
such amendment or supplement shall form a part of this Indenture for all
purposes; and every Holder of Notes theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
Section 8.05 Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.
57
<PAGE> 65
Section 8.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article if the amendment, supplement or waiver does not
adversely affect the rights, duties, immunities or liabilities of the Trustee.
If it does, the Trustee may but need not sign it. The Company may not sign an
amendment or supplement until the Board of Directors approves it.
ARTICLE IX.
MISCELLANEOUS
Section 9.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of TIA Section Section 310 to 317, inclusive,
through operation of TIA Section 318(c), such imposed duties shall control.
Section 9.02 Notices.
Any notice or communication (including any Act of Holders) shall be
sufficiently given if in writing and delivered in person or mailed by
first-class mail, postage prepaid, addressed as follows:
If to the Company:
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: Bernard W. Schotters, Senior Vice President-
Finance and Treasurer
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trustee
Trustee Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
58
<PAGE> 66
Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given to Holders of Notes if in writing and
delivered in person or mailed, by first-class mail, postage prepaid, to each
Holder affected by such event, at his address as it appears in the security
register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to give such notice to
Holders by mail, then such notification as shall be made with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the person entitled to receive such notice, either
before or after the event, and such waiver shall be equivalent of such notice.
Waivers of notice by Holders of Notes shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
Except for a notice to the Trustee, which is deemed given only when
received, if a notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it.
Section 9.03 Communication by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
Section 9.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion
of the signers, all conditions precedent (including any covenants
compliance with which constitutes a condition precedent), if any,
provided for in this Indenture relating to the proposed action have
been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent (including any covenants
compliance with which constitutes a condition precedent) have been
complied with.
59
<PAGE> 67
Section 9.05 Statements Required in Certificate or Opinion.
Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture other
than certificates provided pursuant to Section 4.06 shall include:
(1) a statement that the person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.
Section 9.06 When Treasury Notes Disregarded.
In determining whether the Holders of the required aggregate unpaid
principal amount of outstanding Notes of a particular series or of all series
have given any request, demand, authorization, direction, notice, consent or
waiver or taken any other action hereunder, Notes owned by the Company or by
any Affiliate of the Company shall be disregarded and deemed not to be
outstanding, except that for the purpose of determining whether the Trustee
shall be protected in relying on such request, demand, authorization,
direction, notice, consent, waiver or action, only Notes which the Trustee
actually knows are so owned shall be so disregarded. Notes so owned that have
been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right to so act
with respect to such Notes and that the pledgee is not the Company or any
Affiliate of the Company.
Section 9.07 Rules by Trustee and Agents.
Subject to Section 9.15, the Trustee may make reasonable rules for
action by or a meeting of Noteholders of all series or any series. The
Registrar or Paying Agent may make reasonable rules for its functions.
Section 9.08 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday, or a day on which banking
institutions or trust companies in New York, New York or Denver, Colorado are
not authorized or required to be open. If a payment
60
<PAGE> 68
date is a Legal Holiday, payment may be made on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 9.09 Governing Law.
The laws of the State of New York shall govern this Indenture and the
Notes, without regard to conflicts of laws principles thereof.
Section 9.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 9.11 No Recourse Against Others.
No past, present or future director, officer, employee or stockholder,
as such, of the Company or the Trustee or any successor of either thereof shall
have any liability for any obligations of the Company or the Trustee under the
Notes or this Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation and all such liability is hereby waived
and released. Such waiver and release are part of the consideration for the
issue of the Notes.
Section 9.12 Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 9.13 Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 9.14 Table of Contents, Headings, etc.
The table of contents and the titles and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 9.15 Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in
61
<PAGE> 69
person or by an agent duly appointed in writing. Except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent, or
of the holding by any person of a Note, shall be sufficient for any purpose of
this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee
and the Company and any agent of the Trustee or the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds. Where such execution is by a signer
acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact
and date of the execution of any such instrument or writing, or the authority
of the person executing the same, may also be proved in any other manner which
the Trustee deems sufficient.
(c) The ownership, Original Principal Amount, unpaid principal
amount and serial numbers of outstanding Notes held by any person, and the date
of holding the same, shall be proved by the security register.
(d) If the Company shall solicit from the Holders of Notes of any
series any request, demand, authorization, direction, notice, consent, waiver
or other Act, the Company may at its option (but is not obligated to), by or
pursuant to a resolution of the Board of Directors, fix in advance a record
date for the determination of Holders of Notes of such series entitled to give
such request, demand, authorization, direction, notice, consent, waiver or Act.
Notwithstanding TIA Section 316(c), such record date shall be the record date
specified in or pursuant to such resolution of the Board of Directors, which
shall be a date not earlier than 30 days prior to the first solicitation of
Holders generally in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of Notes of the
applicable series of record at the close of business on such record date shall
be deemed to be Holders for the purpose of determining whether Holders of the
requisite proportion of outstanding Notes have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the outstanding Notes shall be
computed as of such record date; provided that no such authorization, agreement
or consent by the Holders shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than eleven
months after the record date.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind such
Holder and every future Holder of the same Note and the Holder of every Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
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<PAGE> 70
Trustee, any Agent or the Company in reliance thereon, whether or not notation
of such action is made upon such Note.
<TABLE>
<S> <C>
Signatures
Dated:
TELE-COMMUNICATIONS, INC.
By: ------------------------------
Title:
(Seal)
Attest: --------------------
Title:
Dated:
THE BANK OF NEW YORK, as Trustee
By: ------------------------------
(Seal)
</TABLE>
63
<PAGE> 1
[LETTERHEAD]
EXHIBIT 5
May 23, 1994
Tele-Communications
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Gentlemen:
Reference is made to the registration statement on Form S-4 (File No.
33-53157) (the "Registration Statement") filed by Tele-Communications, Inc. a
Delaware Corporation (the "Company") in connection with the offer by the
Company to exchange (the "Exchange Offer") up to $5,000,000 aggregate principal
amount of 9.55% Senior Notes, Series A, due December 15, 2001, up to
$26,500,000 aggregate principal amount of 8.67% Senior Notes, Series B, due
August 31, 2002, up to $36,00,000 aggregate principal amount of 8.85% Senior
Notes, Series C, due August 31, 2002, up to $32,000,000 aggregate principal
amount of 9.82% Senior Notes, Series D, due September 30, 1997 and up to
$20,000,000 aggregate principal amount of 10.25% Senior Notes, Series E, due
September 30, 2000 of the Company (collectively, the "New Note"), for a like
principal amount of the Company's currently issued outstanding 9.55% Senior
Notes, Series A, due December 15, 2001, 8.67% Senior Notes, Series B, due
August 31, 2002, 8.85% Senior Notes, Series C, due August 31, 2002, 9.82%
Senior Notes, Series D, due September 30, 1997 and 10.25% Senior Notes, Series
E, due September 30, 2000 (collectively, the "Existing Notes"), respectively,
with the holders thereof. The New Notes will be issued under an Indenture,
dated as of April 15, 1994, between the Company and The Bank of New York, as
Trustee (the "Indenture").
You have asked us to pass upon for you certain legal matters with
respect to the New Notes. In connection therewith, we have examined, among
other things, the Restated Certificate of Incorporation and By-Laws of the
Company, as amended; the records of the proceedings of the Company's Board of
Directors, including committees thereof, with respect to, inter alia, the
filing of the Registration Statement; the Note Exchange Agreement, dated as of
July 1, 1993, as amended, between the Company and certain institutional
investors; the Indenture and such other documents, records, certificates of
public officials and question of law as we deemed necessary or appropriate for
the purpose of this opinion.
<PAGE> 2
[LETTERHEAD]
Tele-Communications, Inc.
May 23, 1994
Page 2
Based upon the foregoing and subject to the limitations set forth in
the succeeding paragraph, it is our opinion that, when the Registration
Statement has become effective under the Securities Act of 1933, as amended,
the Indenture has been qualified under the Trust Indenture Act of 1939, as
amended, and has been duly executed and delivered by the parties thereto, the
New Notes have been duly executed and authenticated in accordance with the
Indenture and such New Notes have been issued in exchange for an equal
principal amount of the corresponding series of Existing Notes in the Exchange
Offer as contemplated by the Registration Statement and the prospectus
contained therein, such New Notes will be legally issued, valid and binding
obligations of the Company, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
other laws affecting the rights of creditors generally and except that
equitable remedies may not be available.
In rendering the foregoing opinion, we have relied, to the extent we
deem such reliance appropriate, on certificates of officers of the Company as
to factual matters. We have assumed the authenticity of all document submitted
to us as originals and the conformity to authentic original documents of all
documents submitted to us as certified, conformed, or reproduction copies. We
have further assumed that the Exchange Offer will be consummated in the manner
contemplated by the Registration Statement and the prospectus contained
therein.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and the reference to us contained therein under the
heading "Legal Matter." In giving the foregoing consent, we do no admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Jerome H. Kern, a partner of Baker & Botts, L.L.P., is a director of
the Company and certain partners of Baker & Botts, L.L.P. serve as Assistant
Secretaries of the Company.
Very truly your,
BAKER & BOTTS, L.L.P.
<PAGE> 1
[LETTERHEAD]
May 23, 1994
Board of Directors
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Re: Offer to Exchange (the "Offer") 9.55% Senior Notes, Series
A, due December 15, 2001, 8.67% Senior Notes, Series B, due
August 31, 2002, 8.85% Senior Notes, Series C, due August
31, 2002, 9.82% Senior Notes, Series D, due September 30,
1997 and 10.25% Senior Notes, Series E, due September 30,
2000 (the "Senior Notes") for certain outstanding Senior
Notes (the "Existing Notes")
Gentlemen:
We have acted as special counsel to Tele-Communications, Inc., a
Delaware corporation (the "Company"), in connection with its offer to exchange
the Senior Notes for the Existing Notes. In that capacity we have examined the
Existing Notes, the Senior Notes, the Note Exchange Agreement, dated as of July
1, 1993, as amended, between the Company and certain institutional investor,
the Indenture, dated as of April 15, 1994 between the Company and The Bank of
New York, as Trustee, under which the Senior Notes will be issued, the
Registration Statement on Form S-4 (Registration No. 33-53157) (the
"Registration Statement"), the prospectus contained therein (the "Prospectus")
and such other documents and records, and we have made such other
investigations, as we have deemed necessary to enable us to state the opinion
expressed below. As to certain factual matters, we have relied upon the
statements and representations contained in the Registration Statement.
Our opinion is limited to matters governed by the Internal Revenue
Code of 1986, as amended, (the "Code") and the regulations, rulings and
interpretations (judicial and otherwise) thereof as in effect on the date
hereof.
On the basis of our examination and subject to our stated
qualifications, assumptions and limitations, in our opinion:
<PAGE> 2
Board of Directors
May 23, 1994
Page 2
The section of the Prospectus entitled "Certain Federal Income Tax
Considerations" provides a fair summary in all material respects of all
material federal income tax consequences of the Offer.
The opinion set forth above is based on the Code and underlying
regulations, including proposed regulations, rulings and interpretations
(judicial and otherwise) in effect on the date hereof and we disclaim any
responsibility to update this opinion letter. No rulings have been or will be
requested from the Internal Revenue Service concerning any of the tax
consequences described in the Prospectus.
We hereby consent to the filing of this opinion as Exhibit 8 to
the Registration Statement. In giving the foregoing consent, we do not admit
that we are in the category of persons whose consent is required under Section
7 of the Securities Act of 1993, as amended, or the rules and regulations
promulgated thereunder.
Very truly yours,
/s/ Sherman & Howard L.L.C.
SDM:bw
<PAGE> 1
EXHIBIT 12
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
Calculation of Ratios of Earnings to Fixed Charges
(amounts in millions, except for ratios)
(unaudited)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------
1989 1990 1991 1992 1993
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings (losses) from continuing operations before income taxes $ (389) (308) (108) 45 161
Add:
Interest on debt 895 990 928 815 738
Interest portion of rentals 19 23 23 22 23
Amortization of debt expense 5 6 6 9 12
Distributions from and (earnings) losses of less than
50%-owned affiliates with debt not guaranteed by TCI 46 34 (27) (10) 26
Minority interests in earnings (losses) of consolidated
subsidiaries, including preferred stock dividend requirement
of consolidated subsidiaries (36) (63) 24 41 5
Elimination of preferred stock dividend requirement
of consolidated subsidiaries to 50%-owned affiliates (31) (36) (42) (40) -
Preferred stock dividend requirements of 50%-owned
affiliates, other than amounts to TCI 25 15 23 28 -
-------------------------------------------------------
Earnings available for fixed charges $ 534 661 827 910 965
=======================================================
Fixed charges:
Interest on debt:
TCI and consolidated subsidiaries $ 766 868 826 718 731
Elimination of interest of consolidated subsidiaries to
50%-owned affiliates (51) (51) (47) (36) -
TCI's proportionate share of interest of 50%-owned
affiliates 180 173 149 133 7
-------------------------------------------------------
895 990 928 815 738
Interest portion of rentals 19 23 23 22 23
Amortization of debt expense 5 6 6 9 12
Preferred stock dividend requirements of consolidated
subsidiaries 46 56 61 45 6
Elimination of preferred stock dividend requirements of
consolidated subsidiaries to 50%-owned affiliates (31) (36) (42) (40) -
Preferred stock dividend requirements of 50%-owned
affiliates, other than amounts to TCI 25 15 23 28 -
Capitalized interest 5 6 5 6 9
-------------------------------------------------------
Total fixed charges $ 964 1,060 1,004 885 788
=======================================================
Ratio of earnings to fixed charges - - - 1.03 1.22
Deficiency $ (430) (399) (177) - -
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------
1993 1994
----------------------
<S> <C> <C>
Earnings (losses) from continuing operations before income taxes 91 63
Add:
Interest on debt 183 180
Interest portion of rentals 6 6
Amortization of debt expense 3 3
Distributions from and (earnings) losses of less than
50%-owned affiliates with debt not guaranteed by TCI (9) (12)
Minority interests in earnings (losses) of consolidated
subsidiaries, including preferred stock dividend requirement
of consolidated subsidiaries 4 2
Elimination of preferred stock dividend requirement
of consolidated subsidiaries to 50%-owned affiliates - -
Preferred stock dividend requirements of 50%-owned
affiliates, other than amounts to TCI - -
----------------------
Earnings available for fixed charges 278 242
======================
Fixed charges:
Interest on debt:
TCI and consolidated subsidiaries 181 178
Elimination of interest of consolidated subsidiaries to
50%-owned affiliates - -
TCI's proportionate share of interest of 50%-owned
affiliates 2 2
----------------------
183 180
Interest portion of rentals 6 6
Amortization of debt expense 3 3
Preferred stock dividend requirements of consolidated
subsidiaries 1 1
Elimination of preferred stock dividend requirements of
consolidated subsidiaries to 50%-owned affiliates - -
Preferred stock dividend requirements of 50%-owned
affiliates, other than amounts to TCI - -
Capitalized interest 1 3
----------------------
Total fixed charges 194 193
======================
Ratio of earnings to fixed charges 1.43 1.25
Deficiency - -
</TABLE>
(continued)
<PAGE> 2
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
Calculation of Ratios of Earnings to Fixed Charges, continued
(amounts in millions, except for ratios)
(unaudited)
Fixed charges related to interest on debt of less than 50%-owned affiliates
guaranteed by TCI:
<TABLE>
<CAPTION>
Years ended December 31,
<S> <C>
1989 $ 745
1990 710
1991 506
1992 2,517
1993 13,833
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
<S> <C>
1993 $ 629
1994 3,458
</TABLE>
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Form S-4 registration
statement of Tele-Communications, Inc. of our reports, dated March 21, 1994,
relating to the consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1993, and the related
financial statement schedules, which reports appear in the December 31, 1993
Annual Report on Form 10-K of Tele-Communications, Inc. We also consent to the
reference to our firm under the heading "Experts" in the registration
statement.
KPMG PEAT MARWICK
Denver, Colorado
May 18, 1994
<PAGE> 1
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Form S-4 registration
statement of Tele-Communications, Inc. of our report, dated March 18, 1994,
relating to the consolidated balance sheets of Liberty Media Corporation and
subsidiaries (Successor) as of December 31, 1993 and 1992, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 1993 and 1992 and the period from April 1, 1991 to
December 31, 1991 (Successor Periods), and the consolidated statements of
operations, stockholders' equity and cash flows of "Liberty Media" (a
combination of certain programming interests and cable television assets of
Tele-Communications, Inc.) (Predecessor) for the period from January 1, 1991 to
March 31, 1991 (Predecessor Period), which report is included in the April 6,
1994 Current Report on Form 8-K of Tele-Communications, Inc. We also consent
to the reference to our firm under the heading "Experts" in the registration
statement.
KPMG PEAT MARWICK
Denver, Colorado
May 18, 1994
